16. With the change in the direction of the movement of interest rates in 2004, the cap on the “Held to Maturity” (HTM) category (at 25 per cent of the total investments) was reviewed in light of the statutory prescriptions requiring banks to mandatorily invest up to 25 per cent of their Demand and Time Liabilities (DTL) in eligible government securities.
In view of the statutory pre-emption and the long duration of the government securities, banks were permitted to exceed the limit of 25 per cent of total investments under HTM category provided the excess comprised only the SLR securities and the total SLR securities held in the HTM category was not more than 25 per cent of their DTL.