RBI recently issued the draft guidelines for banks on the Liquidity Coverage Ratio (LCR).

About Liquidity Coverage Ratio (LCR):  Definition: Ratio of highly liquid assets to short-term obligations (30 days). Purpose: Ensure financial institutions can meet short-term liquidity needs. 30-Day Period: Based on typical government and central bank response time during crises. Origin: Part of Basel III measures by the Basel Committee on Bank Supervision (BCBS). Implementation in India: RBI issued Basel III guidelines in 2012. LCR implemented by RBI in January 2015.

2020 circular: Maintain sufficient HQLA for unexpected withdrawals. Calculation: Formula: LCR = (High Quality Liquid Assets (HQLA)) / (Total net cash outflows over 30 days). HQLA: Easily and instantly convertible to cash at minimal/no cost. Examples of HQLA: Cash, central bank reserves, central government bonds. India-specific Note: Excess SLR-eligible assets can be considered HQLA under LCR.