• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

New Delhi, Feb 21 Bonds that are to be issued by the Government towards its rights entitlement in the State Bank of India’s Rs 16,700-crore rights issue would not carry ‘SLR status’.

The Union Cabinet on Thursday modified its November 29, 2007 decision to now specify that the Government’s rights issue entitlement amounting to Rs 9,995.99 crore would be subscribed by issue of “Special Marketable Government securities” instead of “SLR Marketable Government securities”.

This would imply that banks’ investment in such bonds would not be counted towards their statutory liquidity ratio (SLR) requirement. In a scenario of surging deposits in the banking system, there is a big demand among banks for SLR securities as they are required to park 25 per cent of their deposits in securities with SLR status.

On the other hand, giving a ‘SLR status’ to bonds could impact the Government’s borrowing programme, an issue that is being weighed in by the Government in the case of oil bonds.

Official sources said that the RBI’s move to change the dispensation on February 13 had prompted the Government to modify its earlier decision. “The modification is being done mainly on account of the time constraint. The rights issue has opened and will close on March 18. The Department of Financial Services will however continue to take up the matter with the RBI and request the central bank to notify them as SLR bonds,” sources said.

Under the new dispensation, the proposed bonds can be issued as “SLR securities” only if it is notified by the RBI for SLR status. Earlier, the proposed securities could have been notified as ‘approved securities’ within the meaning of Section 5 (a) (ii) of the Banking Regulation Act and with SLR status.

More Stories on : Rights Issue | Public Sector Banks | Govt Bonds | State Bank of India

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rupee recovers on dollar sales

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line