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Mumbai Feb. 15 The Government stocks issued in lieu of nationalised banks' recapitalisation bonds will count as eligible investment for Statutory Liquidity Ratio.

"This step will provide additional liquidity to public sector banks and help them meet the credit demand. However, in the bond market, yields may go up as these banks can easily meet their SLR demand," said a dealer at a private bank.

"The government stocks will be transferable and eligible for ready forward transactions (Repo). It will be reckoned as an eligible investment for the purpose of Statutory Liquidity Ratio (SLR)," said a press release by the RBI on Thursday.

The Government has announced the issue of stocks to 19 nationalised banks in lieu of outstanding amount of "10 per cent Nationalised Banks' Recapitalisation Bonds, 2006" aggregating to Rs 4818.78 crore (nominal) and "10 per cent Nationalised Banks' (non-transferable) Special Security, 2006" aggregating to Rs 3889.21 crore (nominal) held by them.

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