a.NSFR is the ratio of the available amount of stable funding relative to the required amount of stable funding. It is a structural ratio that aims to ensure that the banks have sufficient long-term funding beyond the LCR’s 30 day time horizon to meet both the funding of its long term assets and the funding of a portion of contingent liability.
b.The intention of the NSFR is to promote better stable funding of the assets and activities of banking institutions. The NSFR is applicable to IBs approved by the Central Bank to operate under the LCR/NSFR regulatory framework. The purpose of the NSFR is to promote resilience over a longer time horizon than the LCR by creating additional incentives for institutions to fund their activities with more stable sources of funding on an ongoing basis. The NSFR supplements the LCR and has a time horizon of one year. It has been developed to promote a sustainable maturity structure of assets and liabilities. It ensures that longer-term assets are funded with at least a minimum amount of stable liabilities over a 12-month time horizon.
c.The NSFR can be summarised as the requirement for a minimum amount of “stable funding” over a one-year time horizon based on liquidity risk factors assigned to assets, OBS liquidity exposures and other contingent funding obligations. The objective of the ratio is to ensure stable funding on an ongoing, viable entity basis, over one year.