What changed
The statutory minimum CRR of 3% on total demand and time liabilities for StCBs and RRBs was eliminated effective June 22, 2006, following the RBI (Amendment) Act 2006. RBI now has the power to set CRR without any floor or ceiling. The CRR rate stays at 5%, and exemptions for interbank liabilities and CBLO transactions continue.
What it means for you
StCBs and RRBs no longer have a guaranteed low CRR floor, giving RBI full flexibility to adjust CRR for monetary policy. The current 5% CRR and exemptions remain unchanged, so no immediate liquidity impact. Banks must monitor future CRR changes as RBI can now raise or lower rates without legislative constraint.
What you must do
- Continue maintaining CRR at 5% of net demand and time liabilities as before.
- Ensure exemptions for interbank liabilities and CBLO transactions are correctly applied in CRR computation.
- Update internal CRR calculation systems to reflect removal of the 3% statutory minimum floor.
- Stay alert for future RBI circulars that may revise CRR rates or exemption categories.
Who it affects
Scheduled State Co-operative Banks (StCBs), Regional Rural Banks (RRBs), Treasury and compliance teams at StCBs and RRBs
Does this circular change the current CRR rate for StCBs and RRBs?
No, the CRR rate remains at 5% of demand and time liabilities. Only the statutory minimum floor of 3% has been removed, giving RBI flexibility to change rates in the future.
Which liabilities are exempt from CRR under this circular?
Liabilities to the banking system in India (as defined under Section 42 of the RBI Act) and transactions in CBLO with CCIL are exempt from the 5% CRR requirement.
When did these changes take effect?
The amendments and exemptions came into force on June 22, 2006, the date of the circular and notification.