What changed
The Cash Reserve Ratio (CRR) for Scheduled State Co-operative Banks and Regional Rural 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, as announced in the Third Quarter Review of Monetary Policy 2011-12.
What it means for you
This CRR cut releases additional funds for these banks, improving their liquidity position and potentially enabling more lending. It reduces the cost of funds slightly, as less money is held idle with RBI. Banks should adjust their reserve maintenance calculations immediately to reflect the new 5.50% requirement.
What you must do
- Update CRR maintenance calculations to 5.50% of NDTL from the fortnight starting January 28, 2012.
- Ensure compliance with the revised CRR requirement and acknowledge receipt of this circular to your Regional Office.
- Monitor liquidity impact and adjust lending or investment strategies accordingly.
Who it affects
Scheduled State Co-operative Banks, Regional Rural Banks
What is the new CRR rate for SCBs and RRBs?
The new CRR rate is 5.50% of Net Demand and Time Liabilities, reduced from 6.00%.
When does this CRR change take effect?
It is effective from the fortnight beginning January 28, 2012.
Does this circular apply to all banks?
No, it applies only to Scheduled State Co-operative Banks and Regional Rural Banks.