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translateGLOSSARY · BANKING

What is Liquidity Coverage Ratio (LCR)?

LCR requires banks to hold enough high-quality liquid assets to survive a 30-day period of severe cash outflows.

PrepClever Glossary · Banking

updateUpdated July 2026

Formula

LCR = High-Quality Liquid Assets ÷ Net Cash Outflows over 30 days × 100

A Basel III requirement, the Liquidity Coverage Ratio ensures a bank can meet its obligations during a short, sharp liquidity stress without central-bank support. Banks must hold High-Quality Liquid Assets (HQLA) of at least 100% of projected net 30-day outflows.

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Example

A bank holding ₹1,200 crore of HQLA against ₹1,000 crore of stressed 30-day outflows has an LCR of 120%.

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Relevant NISM series

RBI Grade BCAIIB

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Related Terms

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Glossary

Capital Adequacy Ratio (CAR)

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Glossary

Statutory Liquidity Ratio (SLR)

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FAQs about Liquidity Coverage Ratio (LCR)

What are High-Quality Liquid Assets?add

Assets that can be converted to cash quickly with little loss of value — mainly cash, central-bank reserves and government securities.

Where to go from here

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