What is NDTL? Net Demand and Time Liability

NDTL is a vital banking term. It stands for Net Demand & Time Liability and helps us to calculate CRR and SLR. We know that the Reserve Bank of India uses CRR and SLR as tools to control inflation. This post is a short note on NDTL that will give you a fair idea of it. The formula for NDTL calculation is as follows.

NDTL = {(Demand Liability + Time Liability + OTDL) – Assets with other banks} 

A bank’s business is to receive deposits from persons or organizations and give it back to other persons or organizations. They work as a middle-man here. The bank assures the borrowers to repay them with interest. The banks also take interest on loans given to persons or organizations. It is a typical business scenario of a bank.

Assets and Liabilities of a bank

Let’s see what an asset and a liability for a bank is. As you know, ‘asset’ is what you own, and ‘liability’ is what you owe. 

In the same way, your deposits are liabilities for a bank, and your loans are their assets.

When you deposit your money in a bank, the bank has to repay that money with interest (if any) when you demand it. That’s why it is a liability for the bank.

But when you take any loan like personal loan, gold loan, car loan, etc. they generate income from it in the form of interest, and you have to pay it back with interest to the bank. That’s why it is an asset to the bank.

Let’s decode NDTL

To decode NDTL, let’s see first what is ‘Demand Liability.’ Demand Liability is a type of liability that is payable on demand. When you deposit your money in savings accounts or current accounts of a bank, it is a liability for the bank to repay it to you whenever you demand it. Therefore, Savings accounts, Current accounts, Demand Drafts, etc. fall under the ‘Demand Liabilities’ of a bank.

Then comes the term Time liability. Time liability is a type of commitment that is payable after a period. In other words, it has a fixed term or period to mature. When you deposit your money in Fixed deposits, Recurring deposits, Gold deposits, etc. the bank is liable to pay it with interest at the time of its maturity. There is a fixed term for such products, and they are liabilities for the bank. Therefore, Fixed deposits, Recurring deposits, Gold deposits, etc. fall under the ‘Term Liabilities’ of a bank.

Next comes the term ‘ODTL.’ ODTL stands for Other Demand and Term Liabilities. Those liabilities that do not fall under the above two categories ‘Demand Liability’ and ‘Term Liability’ is called ODTL. The interest accrued on deposits, unpaid dividends to shareholders, etc. fall under Other Demand and Term Liabilities.

One last thing, we have to know is ‘Assets with other banks.’ Banks also deposit their surplus money in other banks. For example, they keep their money in fixed deposits, term deposits, cash certificates of other banks, and that amount will come to the bank again on demand or after a fixed term. Therefore, they are assets of the bank. The deposits of a bank in other banks are called ‘Assets with Other banks.’

Applying the formula of NDTL

So, as per the formula, we have to add all the bank liabilities and subtract the bank’s deposit in other banks from it to get NDTL.

This NDTL is required to calculate CRR: Cash Reserve Ratio and SLR: Statutory Liquidity Ratio. CRR and SLR are some of RBI’s tools to control inflation by controlling the liquidity of money in an economy.

To check the current CRR and SLR, click here.

I hope you enjoyed the post. Do share this post with your loved ones, please. Further, I would like to hear from you in the form of comments and suggestions.


4 thoughts on “What is NDTL? Net Demand and Time Liability”

  1. sir, I have a question, why we subtract the assets with other banks, why not subtract all assets, like when bank grant loans to their customers that are also assets and come towards bank again, so why we don’t?

    please help me to clear this concept.

    • In simple terms, NDTL is the balance amount at the end of the day. As per your point, if the bank has got any loans cleared on a particular day, it will reflect in NDTL. Remember, loans can be assets only when it comes back to the bank with interest.



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