CRR Exemption for UCBs on Certain Liabilities from April 2007
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2006-2007/347 · issued 25 Apr 2007 · ~2 min read
Quick answerFrom April 1, 2007, Scheduled Urban 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%.
What changed
The statutory minimum CRR of 3% on total demand and time liabilities was removed effective April 1, 2007, due to the RBI (Amendment) Act, 2006. Consequently, the earlier circular on CRR exemptions was modified, and UCBs are now exempt from maintaining average CRR on liabilities to the banking system and CBLO transactions with CCIL from that date.
What it means for you
UCBs can now free up funds that were previously locked in CRR on these specific liabilities, improving their liquidity position. This change reduces the cost of funds for banks on interbank and CBLO transactions, potentially encouraging more active use of these instruments for liquidity management.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update your CRR computation process to exclude liabilities to the banking system and CBLO transactions with CCIL from average CRR maintenance from April 1, 2007.
Ensure your treasury and compliance teams are aware of this exemption to avoid over-maintaining CRR on these items.
Review your liquidity management strategy to leverage the freed-up funds from this exemption.
Who it affects
All Scheduled Primary (Urban) Co-operative Banks, Treasury departments of UCBs, Compliance teams of UCBs
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Which liabilities are exempt from CRR maintenance 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 from April 1, 2007.
Does this circular remove the statutory minimum CRR of 3% for UCBs?
Yes, the statutory minimum CRR of 3% of total demand and time liabilities was removed effective April 1, 2007, following the notification of Section 3 of the RBI (Amendment) Act, 2006.
What should UCBs do to comply with this circular?
UCBs should adjust their CRR calculations to exclude the specified liabilities and ensure that no CRR is maintained on them from April 1, 2007 onward.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
RBI’s words: “Please refer to our Circular UBD (PCB) Cir. No.3/12.03.000/2006-07 dated March 01, 2007 on the captioned subject.”
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/347
Ref: UBD
(PCB) Cir.No./6/12.03.000/2006-07
April
25, 2007
The Chief Executive Officers of
All Scheduled Primary (Urban)
Co-operative Banks
Dear Sir/Madam,
Maintenance of Cash Reserve
Ratio (CRR) on Exempted Categories
Please refer to our Circular
RBI/2006-07/272
UBD (PCB) Cir. No. 4/12.03.000/2006-07 dated March 01, 2007 on the captioned
subject. Consequent upon the notification of Section 3 of the Reserve Bank of
India (Amendment) Act, 2006, as coming into force with effect from April 01, 2007,
the statutory minimum Cash Reserve Ratio (CRR) requirement of 3 per cent of the
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 Primary (Urban) 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 (d) 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 UBD
(PCB). No./6/12.03.000/2006-2007 dated April 24, 2007 is enclosed.
3. Please acknowledge receipt.
Yours
faithfully,
(N.S.Viswanathan)
Chief General Manager in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/347 · issued 25 Apr 2007. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3452&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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