Banks see 15% rise in non-SLR investments in FY25 amid strong market returns
Agencies
However, banks have to set aside more capital as against SLR securities depending on the risk profile of the product they are investing in
Synopsis
In fiscal year 2025, banks increased their non-SLR investments by 15%. Simultaneously, SLR investments saw a 10% rise. Non-SLR investments offer higher returns compared to government bonds. Experts suggest stock market investments could yield substantial gains if the equity market rallies. Banks must allocate more capital for non-SLR securities due to their risk profiles.
Banks’ non-statutory liquidity ratio (SLR) investments rose 15% in FY25, while SLR investments rose 10% in the same period.
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SLR investments are central government bonds managed by RBI. Non-SLR investments are investments in commercial papers (CPs), stocks, bonds and MFs. Such investments earn more returns than government bonds. While non-SLR exposure earns 100 basis points higher than the comparable sovereign bonds, stock market investments could yield a bonanza if there is rally in equities market, experts say.
However, banks have to set aside more capital as against SLR securities depending on the risk profile of the product they are investing in
