The government on Friday said the issue of granting statutory liquidity ratio (SLR) status to oil bonds issued to oil firms is under consideration. “The matter regarding all issues relating to oil bonds to be released to oil marketing companies (OMCs) is under consideration of the government,” Petroleum Ministry said in a statement. In the present scenario, the government is expected to issue oil bonds of around Rs 40,000 crore to state run oil companies including Indian Oil, Bharat Petroleum and Hindustan Petroleum during this fiscal. During 2006-07, government had issued oil bonds of Rs 24,121 crore. But those were not given SLR status. The estimated under-recoveries of oil companies on sale of petrol, diesel, LPG and PDS kerosene are about Rs 71,800 crore during this fiscal.SLR is the percentage of deposits that need to be maintained as liquid through investing in RBI approved instruments. Currently it is 25 per cent of deposits for scheduled banks.If oil bonds are given status of SLR, banks can meet this statutory requirement by parking their funds in oil bonds. Therefore, the investment option for commercial banks to meet SLR would be widened and state-run oil companies could avail liquidity easily through these bonds.The government on Thursday assured sharing of under-recoveries burden of OMCs by increasing bond percentage from 42.7 to roughly 57, but it could not muster the political courage to increase price of sensitive petroleum products including domestic LPG and PDS kerosene. Instead of proposed petrol and diesel price hike by Rs 4 and Rs 2, the government could raise petrol and diesel prices by Rs 2 and Re 1 respectively.
