NDTL, or Net Demand and Time Liabilities, represents the amount of funds a bank has available for lending.
Here's a more detailed breakdown:
Understanding NDTL
NDTL essentially reflects the difference between a bank's total liabilities (primarily deposits) and its assets held in other banks.
- All liabilities: This includes all deposits made by customers into the bank. Think of it as the total money people have entrusted to the bank.
- Deposits in other banks: This is the amount the bank itself has deposited in accounts at other banks.
The formula for calculating NDTL is:
NDTL = All liabilities - Deposits in other banks
Example
Imagine a bank has total liabilities (deposits) of $1,000,000 and has deposited $100,000 in other banks. Then:
NDTL = $1,000,000 - $100,000 = $900,000
This means the bank has $900,000 available to provide as loans.
