What changed
RBI explicitly clarified that CBLO borrowings by Scheduled State Co-operative Banks and Regional Rural Banks from CCIL are to be classified as 'Liability in India to Others' and included in NDTL. A special exemption from full CRR was granted, limiting the requirement to the statutory minimum of 3% on these borrowings to promote CBLO as a money market instrument.
What it means for you
For SCBs and RRBs, this means CBLO borrowings now attract only a 3% CRR instead of the standard rate, reducing the cost of using this instrument. However, SLR at 25% applies fully on NDTL including CBLO. Banks can also count unencumbered securities in their CCIL Gilt Account (CSGL) for SLR compliance, with daily statements from CCIL aiding tracking.
What you must do
- Include all CBLO borrowings from CCIL in your NDTL calculation for reserve requirements.
- Maintain only the statutory minimum CRR of 3% on these borrowings, not the full CRR rate.
- Ensure SLR of 25% is maintained on total NDTL, including CBLO borrowings.
- Reconcile unencumbered securities in your CCIL Gilt Account daily using CCIL's statement for SLR purposes.
- Place this circular before your bank's board for information and compliance.
Who it affects
Scheduled State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Clearing Corporation of India Ltd. (CCIL)
Why is CBLO borrowing given a special CRR exemption?
To develop CBLO as a money market instrument, RBI granted SCBs and RRBs an exemption from full CRR on these borrowings, requiring only the statutory minimum of 3%.
How can I use securities in my CCIL Gilt Account for SLR?
Unencumbered securities in your CSGL account with CCIL at end of day can be counted for SLR. CCIL provides a daily statement listing lodged, utilized, and unencumbered securities for this purpose.
Does this circular apply to all cooperative banks?
No, it specifically applies to Scheduled State Co-operative Banks and Regional Rural Banks, not all cooperative banks.