The government on Wednesday said the ordinance seeking to empower Reserve Bank to cut Statutory Liquidity Ratio below 25 per cent is expected to be brought in by this month-end or early February.
"It (ordinance) will be sent to the President in the next two days. We expect to get presidential nod by the end of this month or first week of February," Amitabh Verma, joint secretary in the banking division of the finance ministry, told reporters on the sidelines of a seminar on micro finance.
The timing of promulgation of the ordinance assumes importance since the Reserve Bank is slated to come out with its quarterly monetary and credit review on January 31.
Under the present requirements of Statutory Liquidity Ratio, banks currently have to keep 25 per cent of their total deposits in the form of liquid assets comprising cash, gold and approved securities, mostly government bonds.
Sources said an ordinance could only be promulgated before the President summons Parliament, which is generally 21 days before the session. If the session begins on February 23, as is expected, then the President is expected to summon the Houses by February 2, in which case the ordinance could not be issued after February 1.
Last week, the Cabinet had cleared the ordinance to cut the floor limit of SLR. The decision to bring an ordinance to amend Banking Regulation Act, 1949, would provide RBI more operational flexibility in the conduct of monetary policy.
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