Unit 18 Funding and Regulatory Aspects ::-- General objective of RBI monetary policy is to narrow the policy rate corridor to ensure finer alignment of the weighted average call rate (WACR) with the repo rate. Treasury's primary responsibility is to meet the CRR and SLR requirements of bank fully. Treasury back office should report relevant information to RBI in the fortnightly return (Form A), which needs to be submitted strictly within the prescribed time schedule. Main components of DTL are:- + Demand deposits (held in current and savings accounts, margin money for LCs, overdue fixed deposits etc.) + Time deposits (in fixed deposits, recurring deposits, reinvestment deposits etc.) * Overseas borrowings + Foreign outward remittances in transit (FC liabilities net of FC assets) * Other demand and time liabilities (accrued interest, credit balances in suspense account)Schedule Commercial Banks are exempted from maintaining CRR on following liabilities : A) Liabilities of the banking system in India as computed under clause (d) of explanation to Section 42(1) of RBI act, 1934 B) Credit balances in ACU (USS) Accounts. C) Minimum of Eligible Credit and Outstanding long term bonds to finance infrastructure loans and affordable housing loans. D) Demand and Time Liabilities in respect of their Offshore Banking Units (OBUs) E) Eligible amount of incremental FCNR (B) and NRE deposits of maturities of 3 years.The following liabilities are excluded from CRR stipulation :- + Paid-up capital, reserves, retained profits, refinance availed from RBI, and apex financial institutions like NABARD and SIDBI. + Net income tax provisions. * Claims received from DICGC, ECGC, Court Receiver, Insurance Company + Liabilities arising on account of utilization of limits under Bankers Acceptance Facility + District Rural Development Agency subsidy of Rs 10000/- kept in Subsidy Reserve Fund Account in name of Self Help Groups (SHG) + Bill rediscounted by bank with eligible financial institutions as approved by RBI.The SLR is to be maintained in the form of the following assets:-- + Cash balances (excluding balances maintained for CRR) * Gold (valued at price not exceeding current market price) + Approved securities valued as per norms prescribed by RBI. The liabilities excluded from CRR stipulation do not form part of liabilities for the purpose of SLR also. However, exemption for purpose of CRR available to Scheduled Commercial Banks in case of liabilities to banking system in India, credit balances in ACU (US$) Accounts and Demand and Time Liabilities in respect of their Offshore Banking Units (OBU) is not applicable for the purpose of Computation of SLR.RTGS :- RTGS involves instant payments, banks need to maintain adequate funds with RBI throughout the day. To meet any shortfall in funds, RBI has put in place systems to provide intra-day liquidity through automatic repo against securities lodged by respective banks. Negotiated Dealing System is an electronic platform for facilitating dealing in Government securities and money market instruments. Introduced to achieve :- a) automatic electronic reporting & settlement process b) auctions on electronic platform c) a trading platform for trading in Government securities negotiated basis (telephone based trading), as well as quote-driven mechanism.===> Depository Institutions like NSDL (National Securities Depository Ltd.) and CSDL (Central Securities Depository Ltd.) provide delivery vs. payment (DVP) for secondary market deals in equity and debt paper. Security & funds are cleared by their respective clearing houses. Since the funds transfer & securities transfer takes place between the buyer & seller on electronic platform simultaneously, the settlement risk is eliminated. ===> FX Clear is forex dealing system developed by CCIL for foreign exchange transactions (USD/ INR as well as cross currencies). Currently CCIL is providing straight through processing (STP) for USD/INR, and CCIL as intermediary settles inter-bank USD/Rupee deals on net basis, so that the individual bank need not exchange the payments for each transaction. so that the individual bank need not exchange the payments for each transaction.