RB imposes limits on inter-bank liabilities
08 Mar 2007
The Reserve Bank of India (RBI) has asked banks to reduce the concentration of liabilities (deposits) in their books to avoid systemic implications.
It has warned banks, which have a high concentration of wholesale deposits to be aware of potential risks associated with this practice and frame policies to contain liquidity risk arising out of excessive dependence on such deposits.
As per the new norms, inter-bank liability of a bank should not exceed 200 per cent of its net worth as on 31 March, of the previous year. Individual banks may prescribe lower limit keeping in view their business model.