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CRR Exemption for Scheduled State Co-operative Banks

Current · Source: Reserve Bank of India · RBI/2006-2007/340 · issued 24 Apr 2007 · ~2 min read
Quick answerFrom April 1, 2007, Scheduled State Co-operative Banks are exempt from maintaining CRR on liabilities to the banking system and CBLO transactions with CCIL, following the removal of the statutory minimum CRR of 3%.
The rule, in the simplest words
How it plays out — a real example

A co-operative bank branch officer in Indore, Mr. Kumar, was happy to learn that his bank was exempt from maintaining CRR on liabilities to the banking system and CBLO transactions with CCIL. This meant that his bank could free up more funds for lending to customers, including gold loan borrowers. Mr. Kumar made sure to update his bank's CRR computation systems and trained his staff on the revised exemption categories to ensure accurate reporting.

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

Who it affects

Scheduled State Co-operative Banks, RBI Regional Offices handling co-operative banks

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

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.

📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/340 RPCD.CO.RF.BC.No.77/07.02.01/2006-07 April 24, 2007 All Scheduled State Co-operative Banks Dear Sir, Maintenance of Cash Reserve Ratio (CRR) on Exempted Categories Please refer to our Circular RBI/2006-2007/277 RPCD.RF.BC.56/07.02.01/2006-07 dated March 02, 2007 on the captioned subject. Consequent upon the notification of Section 3 of the Reserve Bank of India (Amendment) Act, 2006 coming into force with effect from April 01,2007, the statutory minimum CRR requirement of 3 per cent of total demand and time liabilities no longer exists. It has been decided to modify the above circular accordingly, with effect from April 01, 2007. Therefore, every Scheduled State Co-operative Bank shall be exempted from maintaining average CRR with effect from April 01, 2007 on the following liabilities as computed under Section 42 (1) of the Reserve Bank of India Act, 1934. (i) Liabilities to the banking system in India as computed under Clause (e) of the Explanation to Section 42 (1) of the RBI Act, 1934; and (ii) Transactions in Collateralized Borrowing and Lending Obligation (CBLO) with Clearing Corporation of India Ltd. (CCIL). 2. A copy of the relative notification RPCD.CO.RF.BC.No.76/07.02.01/2006-07 dated April 24, 2007 is enclosed. 3. Please acknowledge receipt to our Regional Office concerned. Yours faithfully, (K.Bhattacharya) General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/340 · issued 24 Apr 2007. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update your CRR computation systems to exclude liabilities to the banking system and CBLO transactions with CCIL from April 1, 2007.
📜 Compliance
  • 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.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (Scheduled State Co-operative Banks, RBI Regional Offices handling co-operative banks), your first concrete step on “CRR Exemption for Scheduled State Co-operative Banks” is: “Update your CRR computation systems to exclude liabilities to the banking system and CBLO transactions with CCIL from April 1, 2007.” (RBI issued this 24 Apr 2007).

  1. Circular: RBI/2006-2007/340 -- CRR Exemption for Scheduled State Co-operative Banks
  2. Issued: 24 Apr 2007
  3. Action required: Update your CRR computation systems to exclude liabilities to the banking system and CBLO transactions with CCIL from April 1, 2007.
  4. Action required: Acknowledge receipt of this circular to your respective Regional Office.
  5. Action required: Review and modify internal policies to align with the removal of the 3% statutory minimum CRR.
  6. Action required: Train staff on the revised CRR exemption categories to ensure accurate reporting.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3447&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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