What changed
The statutory minimum CRR requirement of 3% of total demand and time liabilities was removed effective April 1, 2007, due to the Reserve Bank of India (Amendment) Act, 2006. Consequently, the earlier circular on CRR exemptions was modified to reflect this change. Now, Scheduled State Co-operative Banks are exempt from maintaining average CRR on liabilities to the banking system and CBLO transactions with CCIL from that date.
What it means for you
This reduces the reserve burden for Scheduled State Co-operative Banks on specific liabilities, freeing up funds for lending or other operations. Banks must ensure compliance with the revised CRR norms and adjust their reserve calculations accordingly. The exemption applies only to the specified categories, so other liabilities still require CRR maintenance.
What you must do
- Update your CRR computation systems to exclude liabilities to the banking system and CBLO transactions with CCIL from April 1, 2007.
- Acknowledge receipt of this circular to your respective Regional Office.
- Review and modify internal policies to align with the removal of the 3% statutory minimum CRR.
- Train staff on the revised CRR exemption categories to ensure accurate reporting.
Who it affects
Scheduled State Co-operative Banks, RBI Regional Offices handling co-operative banks
What specific liabilities are exempt from CRR under this circular?
Liabilities to the banking system in India as per Section 42(1) of the RBI Act, 1934, and transactions in CBLO with CCIL are exempt from average CRR maintenance.
When did this exemption take effect?
The exemption is effective from April 1, 2007, coinciding with the enforcement of the RBI (Amendment) Act, 2006.
Does this circular remove all CRR requirements for Scheduled State Co-operative Banks?
No, it only exempts specific categories. Other demand and time liabilities still require CRR maintenance as per RBI norms.