What changed
RBI withdrew its earlier circular dated June 22, 2006 that had provided CRR exemptions on certain categories. However, the central bank clarified that scheduled commercial banks continue to be exempt from maintaining average CRR on four specific liability categories, provided they maintain the statutory minimum CRR of 3% on their total demand and time liabilities.
What it means for you
Banks must now comply with the updated CRR framework, which removes the previous blanket exemption but retains targeted relief for inter-bank liabilities, ACU dollar accounts, CBLO transactions with CCIL, and OBU deposits. This ensures liquidity management remains flexible for these specific instruments while reinforcing the 3% floor on overall CRR compliance.
What you must do
- Update internal CRR computation systems to reflect withdrawal of the June 2006 circular and apply exemptions only on the four listed categories.
- Ensure statutory minimum CRR of 3% is maintained on total demand and time liabilities, even when claiming exemptions.
- Review and adjust reporting of liabilities to banking system, ACU balances, CBLO transactions, and OBU deposits for accurate CRR calculation.
- Acknowledge receipt of the circular and disseminate to relevant treasury and compliance teams.
Who it affects
All Scheduled Commercial Banks (excluding Regional Rural Banks), Treasury and compliance departments, Banks with Offshore Banking Units (OBUs), Banks using CBLO or ACU mechanisms
What liabilities are still exempt from average CRR under this circular?
The exemptions apply to liabilities to the banking system in India, credit balances in ACU US dollar accounts, transactions in CBLO with CCIL, and demand and time liabilities of Offshore Banking Units, subject to maintaining the 3% statutory minimum CRR on total demand and time liabilities.
Does this circular change the CRR requirement for my bank?
It withdraws the earlier June 2006 circular but retains the same exemptions for the four categories. The key requirement is that your bank must continue to maintain at least 3% CRR on total demand and time liabilities.
When did this circular take effect?
The circular was issued on March 1, 2007, and the withdrawal of the earlier circular was effective immediately. The exemptions themselves are effective from June 22, 2006, as stated in the circular.