Understanding Demand and Time liabilities

Sl. No.	Demand liabilities	Time liabilities
1	Demand Liabilities of a bank are liabilities which are payable on demand	Time Liabilities of a bank are those which are payable otherwise than on demand
2	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.	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.

*The average of the minimum balances maintained in each of the month during the half year period shall be treated by the bank as the amount representing the "time liability” portion of the savings bank deposits.
When such an amount is deducted from the average of the actual balances maintained during the half year period, the difference would represent the "demand liability” portion. The proportions of demand and time liabilities so obtained for each half year shall be applied for arriving at demand and time liabilities components of savings bank deposits for all reporting fortnights during the next half year.

Other Demand and Time Liabilities (ODTL)

ODTL include

1. Interest accrued on deposits,
2. Bills payable,
3. Unpaid dividends,
4. Suspense account balances representing amounts due to other banks or public,
5. Net credit balances in branch adjustment account,
6. Any amounts due to the banking system which is not in the nature of deposits or borrowing. Such liabilities may arise due to items like (i) collection of bills on behalf of other banks, (ii) interest due to other banks and so on 

Assets with the Banking System

Assets with the banking system include 

1. Balances with banks in current account,
2. Balances with banks and notified financial institutions in other accounts,
3. Funds made available to banking system by way of loans or deposits repayable at call or short notice of a fortnight or less and
4. Loans other than money at call and short notice made available to the banking system.
5. Any other amounts due from banking system which cannot be classified under any of the above items are also to be taken as assets with the banking system.

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:

1. Paid up capital, reserves, any credit balance in the Profit & Loss Account of the bank,
2. loan taken from the RBI and the amount of refinance taken from Exim Bank, NHB, NABARD, SIDBI;
3. Net income tax provision;
4. Amount received from DICGC towards claims and held by banks pending adjustments thereof;
5. Amount received from ECGC by invoking the guarantee;
6. Amount received from insurance company on ad-hoc settlement of claims pending judgment of the Court;
7. Amount received from the Court Receiver;
8. The liabilities arising on account of utilization of limits under Bankers Acceptance Facility (BAF);
9. District Rural Development Agency (DRDA) subsidy of Rs.10,000/- kept in Subsidy Reserve Fund account in the name of Self Help Groups;
10. Subsidy released by NABARD under Investment Subsidy Scheme for Construction/ Renovation/Expansion of Rural Godowns;
11. Net unrealized gain/loss arising from derivatives transaction under trading portfolio;
12. Income flows received in advance such as annual fees and other charges which are not refundable.
13. Bill rediscounted by a bank with eligible financial institutions as approved by RBI and,
14. Provision not being a specific liability arising from contracting additional liability and created from profit and loss account.

Addition Exempted for CRR

SCBs are exempted from maintaining CRR on the following liabilities:

1. Liabilities to the banking system in India as computed under Clause (d) of the explanation to Section 42(1) of the RBI Act, 1934;
2. Credit balances in ACU (US$) Accounts;
3. Demand and Time Liabilities in respect of their Offshore Banking Units (OBU); and
4. SCBs are not required to include inter-bank term deposits/term borrowing liabilities of original maturities of 15 days and above and up to one year in "Liabilities to the Banking System" (item 1 of Form A return). Similarly banks should exclude their inter-bank assets of term deposits and term lending of original maturity of 15 days and above and up to one year in "Assets with the Banking System" (item III of Form A return) for the purpose of maintenance of CRR. The interest accrued on these deposits is also exempted from reserve requirements.

Written by:  Diganta Boruah, Asst. Manager, AGVB, Golaghat, Assam