ly, banks can meet their short term Uquid ‘Adjustment Faelity on the basis of excess SLR relating to the working and management of the issuing concern. The securities issued by the iment and semi-Government organisations are rated high because they command ‘on the basis of thelr sound financial position, ability to spetence and reputation of the ity of the price of the security. exchange sccuritis is to enable the banker to s ties preferred by the banks for this purpose should, "they can be sold in the marlet without much loss of lime and money and in bulk also, ifneed arises. Government and semi-Government securities possess these qualities to a large extent. 3, Profitability or Yield. Though a banker is necessarily interested in the yeld or return on. his investments, he should not glve undue importance to higher yl Investment in Government and Trustee Securities, ‘The predominance of Government and semi-Covernment securities in the investment portfolio ‘of commercial banks may be attributed to the following factors : 1. The Statutory Requirement. Secon 24 ofthe Banking Regulation Act, 1948. requires Both sehedled and nonsehedued! banks fo atin in nda in adaton tothe minus Investment in Securittes us ‘cash balances with the Reserve Bank), cash, gold or unencumbered approve the close of business on any day of an amount not specified per statu ‘AL present banks are Gemand and ime lablities. Scheduled banks are the prominent investors in Government securities. Jong dated securities. ‘Axed income securities depreciate in value with a rise in the Bank Rate because the fh securities falls. As the short-dated securities mature in the near future the fall iue will be comparatively less as compared to long dated securities. preference ‘rations inthe same are within a very narrow range as compared to the corporate securities. ‘The regularity of return makes Government securities attractive forthe bankers. Since 1992. 93 there has been an upward ehift In the yield curve in the primary market of Government Securities, During 1995-96 the interest rates on normal market borrowings ranged between 10 year maturities. .commodation from the Reserve Bank. As the Reserve Bank of India jon to the scheduled banks on the security of the Trustee Securities ‘of the Reserve Bank of India Act, 1934, banks prefer to invest in such ‘preasury Bille, Commercial banks also invest their surplus funds inthe treasury bills issued by the Reserve Bank on behalf ofthe Central Government. The sale of treasury bills provides shortterm finance to the Government and also helps to absorb any excess liquicity in the ‘money market. ‘Treasury bills in India were issued for the maturities of 14 days, 91 days, 182 days and 364 days, But with effect from 14 May 2001, issues of 14 day Treasury Bills and 182 day