Ordinance on SLR expected soon: Govt

New Delhi: An ordinance empowering Reserve Bank to cut statutory liquidity ratio (SLR) below the current floor limit of 25 per cent is expected to be brought in by this month-end or early February, said the Government on Wednesday. The

While the Government awaits the President's nod for the ordinance, a Bill to amend the Banking Regulation Act is expected to be tabled in the Budget session, said Minister of state for Finance P K Bansal in New Delhi.

Apart from the proposal amend the Act, the Bill would also contain provision on removing the floor of SLR, besides lifting the 10 per cent cap on voting rights of foreign banks in private sector banks, he said on the sidelines of a seminar on micro-finance.

"We are negotiating with our allies... discussions on the issue (on amending the Banking Regulation Act) would be carried out during the Budget session. We will be trying again and we are confident that during the Budget session, this bill would be tabled," Bansal said as quoted by PTI.

The timing of promulgation of the ordinance assumes importance since the Reserve Bank is slated to come out with its quarterly monetary and credit review on January 31.

Under the present requirements of Statutory Liquidity Ratio, banks currently have to keep 25 per cent of their total deposits in the form of liquid assets comprising cash, gold and approved securities, mostly Government bonds.

Sources said an ordinance could only be promulgated before the President summons Parliament, which is generally 21 days before the session.

If the session begins on February 23, as is expected, then the President is expected to summon the Houses by February two, in which case the ordinance could not be issued after February 1.

Last week, the Cabinet had cleared the ordinance to cut the floor limit of SLR. The decision to bring an ordinance to amend Banking Regulation Act, 1949, would provide RBI more operational flexibility in the conduct of monetary policy.

Due to opposition of UPA's Left allies to the Bill's provision to remove the cap on voting rights of foreign banks, the Bill could not be tabled in the last session of Parliament.