What changed
The Cash Reserve Ratio (CRR) for Scheduled Primary (Urban) Co-operative Banks was reduced by 50 basis points, from 6.00% to 5.50% of their net demand and time liabilities (NDTL). This change takes effect from the fortnight beginning January 28, 2012, superseding the earlier CRR notification dated April 21, 2010.
What it means for you
Urban co-operative banks will now need to hold less cash with RBI, freeing up liquidity for lending or other deployment. This 50 bps cut directly improves their lendable resources and may support credit growth in the urban co-operative banking sector.
What you must do
- Recalculate your CRR requirement at 5.50% of NDTL for the fortnight starting January 28, 2012.
- Adjust your daily CRR maintenance to reflect the new lower average ratio.
- Acknowledge receipt of this circular to your controlling office.
- Update internal systems and reporting templates to the revised CRR rate.
Who it affects
All Scheduled Primary (Urban) Co-operative Banks, Treasury and ALM teams of UCBs, Compliance departments of UCBs
What is the effective date for the new CRR rate?
The reduced CRR of 5.50% applies from the fortnight beginning January 28, 2012.
Does this circular apply to all urban co-operative banks?
Yes, it applies to all Scheduled Primary (Urban) Co-operative Banks covered under Section 42(1) of the RBI Act, 1934.
What was the previous CRR rate before this cut?
The earlier CRR was 6.00% of NDTL, as per the circular dated April 21, 2010.