Net Demand and Time Liabilities: Calculation and Reserve Ratios

Net Demand and Time Liabilities, or NDTL, is the total money a bank owes its depositors and other creditors after subtracting what other banks owe it. The Reserve Bank of India uses this one figure to set every scheduled bank’s mandatory reserves: as of 2026, banks must park 3 percent of NDTL with the RBI as cash and hold another 18 percent in approved liquid assets.¹ Get the NDTL wrong and every downstream reserve number is wrong with it.

Demand Liabilities

A demand liability is money the customer can walk in and claim immediately. Current account balances and the withdrawable portion of savings deposits are the big ones. The category also picks up margins held against letters of credit and guarantees, outstanding telegraphic and mail transfers, demand drafts, unclaimed deposits, credit balances in cash credit accounts, and security deposits that a depositor can call back on demand.²

One item catches many people off guard. Overdue fixed deposits and matured cumulative or recurring deposits get reclassified as demand liabilities once maturity passes without renewal. From the bank’s liquidity perspective, an uncollected matured FD is no different from a current account balance: the customer can ask for it any moment.²

Time Liabilities

Time liabilities are obligations that come with a fixed duration or a notice period before withdrawal. Fixed deposits are the most familiar case. Recurring deposits, cash certificates, and cumulative deposits sit here too, because each carries a contractual timeline.³

The bucket also includes the portion of savings deposits that requires notice, staff security deposits, gold deposits, margins on letters of credit that don’t allow immediate withdrawal, and deposits held as security for advances that aren’t payable on demand.³

Other Demand and Time Liabilities

Some obligations don’t fit either deposit category but still count as money the bank owes. The RBI groups these as Other Demand and Time Liabilities (ODTL). The largest recurring item is interest accrued on deposits: the amount builds daily even before payout, and the bank must recognize it as it accrues. Bills payable, unpaid dividends, suspense account balances owed to other banks or the public, and net credit balances in branch adjustment accounts also fall under ODTL, along with any amount due to the banking system that isn’t a deposit or borrowing.⁴

What Is Not Counted

Several items on a bank’s balance sheet stay out of NDTL entirely. Paid-up capital, reserves, and any credit balance in the profit and loss account are excluded because they belong to the bank’s owners, not its outside creditors. Loans from the RBI itself and refinance facilities from NABARD, SIDBI, NHB, and EXIM Bank are also left out.⁵

A few contingent receipts sit outside NDTL as well: claim amounts received from the Deposit Insurance and Credit Guarantee Corporation pending adjustment against advances, amounts received from court receivers, and insurance claim settlements awaiting judicial outcomes.⁶

How NDTL Is Calculated

Start by adding the three liability buckets: demand liabilities, time liabilities, and ODTL. That total is the bank’s gross demand and time liabilities. To move from gross to net, the bank subtracts its assets with the banking system from its liabilities to the banking system. That netting step is what puts the “net” in NDTL. It strips out interbank positions so reserve requirements track only what the bank owes outside the banking system.⁷

What Counts as an Interbank Asset

The subtractable assets include balances held with other banks in current accounts, balances with banks and notified financial institutions in other accounts, call money and short-notice loans repayable within a fortnight, and term loans made to other banks. Amounts placed with other banks for issuing drafts, interest warrants, or dividend warrants can be netted off at the bank’s discretion. Lending to banks abroad does not qualify: a bank cannot reduce its domestic NDTL by pointing to placements with foreign banks.⁸

The Netting Rule

If interbank liabilities exceed interbank assets, the positive difference is added to the bank’s liabilities to others (depositors and non-bank creditors) to arrive at NDTL. If interbank assets exceed interbank liabilities, the difference is treated as zero rather than a negative offset, and only liabilities to others count. A bank cannot use surplus interbank lending to shrink its reserve base below what it owes the public.⁷

Reporting the Figure

Banks report NDTL on a fortnightly cycle, and the fortnight itself was redefined in 2025. Under the Banking Laws (Amendment) Act, 2025, a fortnight now runs from the 1st to the 15th of each calendar month and from the 16th to the last day of the month. The earlier Saturday-to-second-following-Friday cycle no longer applies. Banks maintain their CRR and SLR against the NDTL as it stood on the last day of the second preceding fortnight.¹

The filing itself has been simplified. Banks now submit a single Form A return each fortnight instead of the earlier provisional, final, and special returns. Section 42 of the Reserve Bank of India Act, 1934 remains the statutory basis. Accrued interest must be included at each reporting date; a bank cannot wait until interest is actually paid out to recognize it.¹

How NDTL Drives Reserve Requirements

NDTL is the base for two mandatory ratios and a borrowing ceiling.

Cash Reserve Ratio

The CRR requires every scheduled bank to keep a percentage of its NDTL with the Reserve Bank of India in a non-interest-bearing account. As of 2026, the CRR is 3 percent. Because the RBI pays no interest on these balances, the CRR is a pure liquidity buffer rather than an earning asset.⁹ Banks do not have to hold the full amount every single day. The rule is a minimum of 95 percent of the required average daily balance across the fortnight, which allows some intra-fortnight flexibility.¹⁰

Statutory Liquidity Ratio

The SLR requires banks to hold a percentage of their NDTL in liquid assets: government securities, cash, and gold. The current SLR is 18 percent. Unlike CRR balances, SLR-eligible assets earn returns for the bank while remaining readily convertible.

Marginal Standing Facility

NDTL also caps emergency borrowing. Under the Marginal Standing Facility (MSF), eligible banks can borrow from the RBI by dipping into their SLR holdings by up to 2 percent of NDTL.¹¹ During periods of acute liquidity stress, the RBI has temporarily expanded that limit to 3 percent of NDTL.¹² The MSF rate is set above the repo rate, so banks tap it only when normal funding channels fall short.

Penalties for Falling Short

A CRR shortfall below the 95 percent daily minimum triggers penal interest at 3 percent per annum above the bank rate on the shortfall for the first day of default. If the shortfall runs into the next day, the rate rises to 5 percent per annum above the bank rate.¹⁰

SLR defaults follow the same escalation: 3 percent above the bank rate on the first day, then 5 percent above the bank rate for each subsequent day the shortfall continues. With the bank rate at 5.50 percent as of 2026, a continuing SLR default would carry penal interest at 10.50 percent per annum on the shortfall. Sustained non-compliance can also lead to lending restrictions and heightened regulatory scrutiny.¹⁰

1
Reserve Bank of India. Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Amendment Directions, 2025
2
Reserve Bank of India. Master Circular – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) – Section: 1.5 Demand Liabilities
3
Reserve Bank of India. Master Circular – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) – Section: 1.6 Time Liabilities
4
Reserve Bank of India. Master Circular – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) – Section: 1.7 Other Demand and Time Liabilities (ODTL)
5
Reserve Bank of India. Master Circular – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) – Section: 1.11 Liabilities Not to Be Included for DTL/NDTL Computation
6
Reserve Bank of India. Master Circular – Maintenance of Statutory Reserves – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) by Primary (Urban) Co-operative Banks
7
Reserve Bank of India. Draft Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025
8
Reserve Bank of India. Master Direction – Reserve Bank of India (Cash Reserve Ratio and Statutory Liquidity Ratio) Directions – 2021
9
Reserve Bank of India. Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
10
Reserve Bank of India. Master Circular – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
11
Reserve Bank of India. Master Circular – Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
12
Reserve Bank of India. Reserve Bank of India Press Release