For instance, as payments banks hold government securities for liquidity purposes, we can reduce the quantity of government securities we ask commercial banks to hold as part of SLR. While on the issue of bank obligations, there is an area where they do seem to be at a disadvantage vis-a-vis other financial institutions – in the raising and lending of long term money.
This becomes especially important for infrastructure, where banks can be essential in early stage construction financing. Since construction lasts for 5–7 years, banks should be able to raise long tenor money for these purposes. But if they raise such money today, they immediately become subject to CRR and SLR requirements, and any lending they do attracts further priority sector obligations.