Maintenance of Statutory Reserves
The Reserve Bank of India (RBI) has issued a master circular on the maintenance of statutory reserves, specifically Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), for Primary (Urban) Co-operative Banks.
Statutory CRR Requirements: The CRR is applicable on net demand and time liabilities (NDTL) of scheduled Urban Co-operative Banks (UCBs). The effective date for CRR is from the fortnight beginning, and the rate is 3% of NDTL.
Maintenance of CRR: UCBs must maintain a minimum CRR on a daily basis, calculated on the average daily balance of NDTL during a fortnight. The CRR balance must be maintained in the form of cash balances with the RBI or in the current account with the RBI.
Computation of NDTL: NDTL includes demand and time deposits, but excludes certain exempted categories such as deposits of the Central Government, State Governments, and other specified entities.
Other Provisions: UCBs are not allowed to borrow from banks abroad for maintaining CRR. They must also maintain cash balances with the RBI and not earn interest on CRR balances.
Exemptions: Certain categories of deposits, such as those of the Central Government, State Governments, and other specified entities, are exempt from CRR.
Chat with the Master Circular: