Computation of Adjusted Net Bank Credit

Method to calculate Adjusted Net Bank Credit:-

Bank Credit in India (As prescribed in item No.VI of Form ‘A’ (Special Return as on March 31st) under Section 42 (2) of the RBI Act, 1934.	I
Bills Rediscounted with RBI and other approved Financial Institutions	II
Net Bank Credit (NBC)	III (I – II)
Investments in Non-SLR categories under HTM category + other investments eligible to be treated as priority sector.	IV
Adjusted Net Bank Credit	III + IV

I. Bank Credit in India

Bank credit includes all loans, advances, overdrafts provided by a bank or financial institution to its customers. It includes bills discounted.

II. Bills Rediscounted with RBI and other approved Financial Institutions

Banks discount the bill of exchange for some margin, It acts as a short term loan for its customer.

In case a bank is facing a liquidity crunch, it may want to encash the bills that it has discounted. The bank will rediscount the bill with other financial institution to fulfil its liquidity requirements.

IV. Investments in non-SLR categories

Banks need to maintain a certain percentage of funds for Cash Reserve Ratio and Statutory Liquidity Ratio. 

Following investments are considered non-SLR category investment:

Bonds/debentures in Non-SLR categories under HTM(Held to maturity) category+ other investments eligible to be treated as priority sector + Outstanding Deposits under RIDF and other eligible funds with NABARD, NHB, SIDBI and MUDRA Ltd on account of priority sector shortfall + outstanding PSLCs