This is a structural ratio that aims to ensure that long term assets on the banks’ balance sheets are funded using a sufficient amount of stable liabilities. It also requires an amount of stable funding to cover a portion of the contingent liabilities. The NSFR mirrors the Basel III standard.

The NSFR identifies the key uses of funds and the different types of funding sources used by banks. It assigns Available Stable Funding (ASF) factors to the sources of funds and Required Stable Funding (RSF) (usage) factors to asset classes and the off balance sheet contingent exposures.

The assigned ASF factor depends on the term of funding and the perceived stability of the funding source. The assigned RSF factor will depend on the liquidity of the asset being funded under a market wide stress. Both factors will follow the Basel III NSFR standard.

Under Article (10) below, the Banking Supervision Department within the Central Bank is required, to issue a Guidance Manual that specifies the stability factors to be assigned to funding sources and the required stable funding (Usage) factors of various asset classes.

The Loans to Stable Resources Ratio specified in Circular No. 394 dated 12/07/1986 shall continue to apply, except for those banks approved to move to the NSFR.