What changed
RBI withdrew its earlier circular of June 22, 2006 on CRR exemptions for StCBs. However, the substantive exemption remains unchanged: StCBs continue to be exempt from maintaining average CRR on liabilities to the banking system and CBLO transactions, provided they maintain the statutory minimum CRR of 3% on total demand and time liabilities.
What it means for you
Scheduled State Co-operative Banks can continue to exclude interbank liabilities and CBLO borrowings from average CRR calculations, reducing their reserve costs. This supports liquidity management for StCBs while ensuring they still meet the mandatory 3% floor on overall liabilities.
What you must do
- Verify your StCB's current CRR compliance to ensure the 3% statutory minimum is maintained on total demand and time liabilities.
- Update internal CRR computation systems to continue excluding interbank liabilities and CBLO transactions from average CRR.
- Acknowledge receipt of this circular to your respective RBI Regional Office as instructed.
Who it affects
Scheduled State Co-operative Banks, RBI regional offices overseeing StCBs
Does this circular change the CRR exemption for StCBs?
No, the exemption remains the same as before. RBI only withdrew the earlier circular but reissued the same exemption conditions.
What liabilities are exempt from average CRR for StCBs?
Liabilities to the banking system (as defined under Section 42(1) of the RBI Act) and transactions in CBLO with CCIL are exempt, subject to maintaining 3% statutory minimum CRR on total liabilities.
What is the effective date of this exemption?
The exemption is effective from June 22, 2006, as stated in the circular.