What is Net Demand and Time Liabilities ( NDTL ) and ( ODTL ) ? Detailed

What is Net Demand and Time Liabilities ?

Demand and Time Liabilities (DTL) and Net Demand and Time Liabilities (NDTL) are two terms that often appear in discussions about the Reserve Bank of India’s monetary policy and market liquidity.

Demand and Time Liabilities (DTL) and Net Demand and Time Liabilities (NDTL)


Banks earn money by accepting deposits and lending those cash. Liabilities are the bank’s available resources for lending. The three categories of liabilities that a bank may have are demand liabilities, time liabilities, and other demand and time obligations (ODTL). Demand and time deposits from the public account for the lion’s share of the bank’s liabilities.


The liabilities of a bank are outlined under Section 42 of the RBI Act, 1934. According to this definition, a bank’s obligations may be to the banking system or to third parties in the form of demand and time deposits, borrowings, and other miscellaneous liabilities. 


Additionally, the Reserve Bank of India (RBI) has the jurisdiction under Section 42(1C) of the RBI Act, 1934, to determine whether a particular transaction or set of transactions is a liability of Indian banks.

Consider each NDTL term. To begin, you must understand the idea of demand liabilities.


Net Demand Liabilities Meaning


Deposits that a customer may withdraw at any time. The purchaser may essentially remove his or her funds at any moment. It should be carried out only when necessary. At any moment, a customer may remove monies from their Savings and Current Account Deposits.


On the date mentioned in the request drawn, a bank should provide the amount mentioned in the request. This is sometimes referred to as a demand obligation in the context of a bank. Demand liabilities are included, as are margins on Letters of Credit and bank guarantees.


Time Liabilities Meaning


Time liabilities are deposits that may be withdrawn only after a certain period has elapsed. For a long period, fixed deposits served as a kind of investment. 


Assume you established an FD for one year and then abandoned it. This FD has been reclassified as an overdue FD and is now designated as a Demand obligation. However, if you cancel your FD early, you will be penalized and get a lower interest rate than the bank pledged when creating your FD.


Current deposits like the Mutual Fund’s systemic investment strategy, are subject to time constraints. Cash certificates contain both a monetary and a temporal value. This may continue for years and may be used as security for loans. 


• You pay a certain fee for these certificates, and you continue to pay that price for the duration of the certificate’s validity.


• You may be able to receive revenue from the banks if you purchase these certificates. Because gold may be used to borrow money, gold holdings are also temporal liabilities.


• The gold may be accessible only if the bank has given you a loan for a certain amount of time.


Also Read :-

What are Current Assets ? Formula and Example for Current Assets ?

Define Working Capital : Example, Importance, Concept

Petty Cash Book : Definition, Types, Format, and Example

Financial Statement : Objectives of Financial Statement

Other Demand and Time Liabilities (ODTL ) 


In a nutshell, it is referred to as ODTL. These are the remaining demand and time-related responsibilities that were not covered in the previous paragraphs. Dividends that are past due, unpaid deposit interest, and bill payments are just a few instances. A bank has been delinquent in fulfilling certain commitments over an extended period. Dividends, among other things, remain unpaid.


How to calculate Net demand and time liabilities?


You must have computed current demand bonds, time passes, and additional demand and time bonds. These are the duties a bank has with its customers. The bank now deposits funds in other banks to earn interest and fully repay the principal. As you can see, a bank may use a variety of different tactics.




Divide the deposit in another bank by the deposit in the bank’s demand and time liabilities.

(Deposits with other banks + Time liability + ODTL) Equals the bank’s NDTL.

Other Demand and Time Liabilities Components


1. Interest on deposits,

2. Accounts payable

3. Dividends not paid

4. The branch adjustment account’s net credit balances,

5. Suspense account balances about monies owed to other banks or the public, as well as any sums owed to the banking system that are neither deposits nor borrowing.

6. certificates of participation granted to other banks,

7. monetary collaterals

8. the money paid as a margin on bills bought/reduced

9. Gold borrowed from overseas by banks, etc.


The Banking System’s Assets


Assets held by a bank in its banking system comprise the following: 

1. Current account balances with banks; 

2. Other account balances with banks and other financial organizations.

3. Funds made available to the banking system in the form of loans or deposits repayable on-demand or with a fortnight’s notice,

4. Loans other than money on-demand or with a fortnight’s notice made available to the banking system.

5. Any additional debts owed to the financial system that does not fit into any of the above categories


Sums put by banks providing drafts/interest/dividend warrants as part of a remittance agreement are to be recognized in their books as ‘Assets with banking system’ and may be netted off against their inter-bank liabilities.


Why is NDTL so critical?


The NDTL criteria are applicable to the CRR (Cash Reserve Ratio), the SLR (Statutory Liquidity Ratio), and several other instruments and measures. All of these tactics and initiatives contribute to the economy’s liquidity preservation. Additionally, it assists in estimating inflation in a particular economy.


NDTL is the start of the terminology section that a central bank uses when dealing with other banks, and as such, you should be acquainted with it. After you’ve mastered this, you’ll find it much simpler to understand other words.



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