Suryoday Small Finance Bank Limited
Annexure 22 - Notes forming part of the Restated Summary Statements
(All amounts are in Indian Rupees in million unless otherwise stated)

 

Quantitative information on Liquidity Coverage Ratio (LCR) is given below:
‘The objective of LCR is to ensure that the Bank maintains an adequate stock of unencumbered HQLA that can be converted into cash to meet its liquidity needs for a 30 day period. under a significantly severe liquidity stress scenario. At a
minimum, the stock of liquid assets should enable the Bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken,

‘The LCR is calculated by dividing the amount of High Quality Liquid unencumbered Assets (HQLA) by the estimated net cash outflows over a stressed 30 day period as per RBI Guidelines. Minimum LCR requirement for small finance banks is
90% upto 31 March 2021 and 100% by April 1, 2021. As per RBI circular on Basel Ill Framework on Liquidity Standards ~ Liquidity Coverage Ratio (LCR) dated April 17, 2020, the LCR requirement for Banks is reduced as under:

From date of circular to September 30, 2020 - 80%
Oct 1, 2020 to March 31, 2021 = 90%
April 1, 2021 onwards = 100%

HQLA comprises of cash in hand, excess CRR, exces

 

SLR/Non SLR securities, maximum liquidity facility allowed by RBI under marginal standing facility (MSF) and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR).

‘The net cash outflows are calculated by applying RBI prescribed outflow factors to the various categories of liabilities (deposits, borrowings), as well as to undrawn commitments and other miscellaneous liabilities, partially offset by inflows from
assets maturing within 30 days.

Reason for LCR in excess of minimum regulatory requirement are as follows:

1. The Bank continues to maintain excess liquidity to meet fund requirement for disbursements and contingency funding for contingencies.

Reason for increase in LCR during the period:
1. Maintaining excess liquidity in HQLA to meet fund requirement and funding for contingencies.

‘The major sources of funding are deposits, inter-banks borrowing and refinance from financial institutions.
‘The liquidity management of the Bank is centralised at Treasury. Treasury Front Office shall, depending upon the expected outflows and inflows for the day, decide to borrow or lend to maintain optimal liquidity.

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