Time Liabilities are the funds deposited with a bank that the bank has to pay after the expiry of a period of time. Basically, any liability of a bank which it is not bound to pay on demand is a time liability.
What constitute Time Liabilities
Such liabilities would include:
- Fixed deposits;
- Cumulative deposits;
- Recurring deposits;
- Staff security deposits;
- Cash certificates;
- Gold deposits;
- Margins against letters of credit (provided these are not payable on demand);
- Deposits constituting the security for advances (provided the advances are not repayable on demand);
- Segment of savings bank deposits that is not payable on demand.
Relevance
Demand and time liabilities (DTL) are significant for computation of the Cash Reserve Ratio (CRR) to be maintained by banks with the Reserve Bank of India (RBI). The extant CRR has been prescribed at 4.00 per cent of the aggregate of DTL of a bank. Currently, no additional CRR has been prescribed by RBI, though it has been empowered to enforce such a requirement.
In the event of any doubt regarding classification as time liability, banks are required to make a reference to RBI for clarification
