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Difference between Demand Liabilities and Time Liabilities
Demand Liabilities of a bank are liabilities which are payable on demand. These include current deposits, demand liabilities portion of savings bank deposits, margins held against letters of credit/guarantees, balances in overdue fixed deposits, cash certificates and cumulative/recurring deposits, outstanding Telegraphic Transfers (TTs), Mail Transfers (MTs), Demand Drafts (DDs), unclaimed deposits, credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand. Money at Call and Short Notice from outside the banking system should be shown against liability to others.
Time Liabilities of a bank are those which are payable otherwise than on demand. These include fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits, staff security deposits, margin held against letters of credit, if not payable on demand, deposits held as securities for advances which are not payable on demand and Gold deposits.
Often "Demand and Time liabilities" together are referred to as "DTL" in short. Net Demand and Time Liabilities is noted as NDTL.
Other Demand and Time Liabilities (ODTL)
ODTL include interest accrued on deposits, bills payable, unpaid dividends, suspense account balances representing amounts due to other banks or public, net credit balances in branch adjustment account, any amounts due to the banking system which are not in the nature of deposits or borrowing. Such liabilities may arise due to items like collection of bills on behalf of other banks, interest due to other banks and so on. If a bank cannot segregate the liabilities to the banking system, from the total of ODTL, the entire ODTL may be shown against item II (c) 'Other Demand and Time Liabilities' of the Return in Form 'A' and average CRR maintained on it.
The balance outstanding in the blocked account pertaining to segregated outstanding credit entries for more than 5 years in inter-branch adjustment account, the margin money on bills purchased / discounted and gold borrowed by banks from abroad, should also be included in ODTL.
Cash collaterals received under collateralized derivative transactions should be included in the bank’s DTL/NDTL for the purpose of reserve requirements as these are in the nature of ‘outside liabilities’. Interest accrued on deposits should be calculated on each reporting fortnight (as per the interest calculation methods applicable to various types of accounts) so that the bank’s liability in this regard is fairly reflected in the total NDTL of the same fortnightly return.
DTL in computation of CRR-Cash Reserve Ratio
CRR is prescribed at 4.00 per cent of a bank's total of DTL. Banks are exempted from maintaining CRR on the Demand and Time Liabilities in respect of their Offshore Banking Units (OBU).
Liabilities not to be included for DTL/NDTL computation
The under-noted liabilities will not form part of liabilities for the purpose of CRR and SLR:
a) Paid up capital, reserves, any credit balance in the Profit & Loss Account of the bank, amount of any loan taken from the RBI and the amount of refinance taken from Exim Bank, NHB, NABARD, SIDBI;
b) Net income tax provision;
c) Amount received from DICGC towards claims and held by banks pending adjustments thereof;
d) Amount received from ECGC by invoking the guarantee;
e) Amount received from insurance company on ad-hoc settlement of claims pending judgement of the Court;
f) Amount received from the Court Receiver;
g) The liabilities arising on account of utilization of limits under Bankers’ Acceptance Facility (BAF);
h) District Rural Development Agency (DRDA) subsidy of Rs. 10,000/- kept in Subsidy Reserve Fund account in the name of Self Help Groups;
i) Subsidy released by NABARD under Investment Subsidy Scheme for Construction/Renovation/Expansion of Rural Godowns;
j) Net unrealized gain/loss arising from derivatives transaction under trading portfolio;
k) Income flows received in advance such as annual fees and other charges which are not refundable; l) Bill rediscounted by a bank with eligible financial institutions as approved by RBI.