The Reserve Bank of India on 6th January 2022, has increased the threshold limit for deposits and other extensions of funds made by non-financial Small Business Customers from ₹ 5 crore to ₹ 7.5 crore for the purpose of maintenance of Liquidity Coverage Ratio (LCR).
The threshold modification is applicable to deposits and other extensions of funds received from Small Business Customers that are managed as retail exposures and are generally considered as having similar liquidity risk characteristics to retail accounts provided total aggregated funding from any such Small Business Customer is upto 7.5 crore.
Aggregated funding” means the gross amount (i.e. not netting any form of credit extended to the legal entity) of all forms of funding (e.g. deposits or debt securities or similar derivative exposure for which the counterparty is known to be a small business customer). Notwithstanding the definition of small business customer as defined in RBIs earlier circular dated 1st July 2015 a bank may include a deposit in this category provided that the total aggregate funding raised from the customer I upto 7.5crore (on an aggregate basis where applicable) and the deposit is managed as a retail deposit.
This means that the bank treats such deposits in its internal risk management systems consistently over time and in the same manner as other retail deposits, and that the deposits are not individually managed in a way comparable to larger corporate deposits.
