What changed
The CRR for Scheduled Primary (Urban) Co-operative Banks was increased by 50 basis points from the previous level to 7.50%. This change takes effect from the fortnight beginning November 10, 2007, superseding the earlier July 31, 2007 circular.
What it means for you
Urban co-operative banks must set aside a larger portion of their deposits as reserves with RBI, reducing lendable resources. This move aims to absorb excess liquidity and curb inflationary pressures, impacting their net interest margins and liquidity management.
What you must do
- Recalculate CRR requirement at 7.50% of demand and time liabilities for the fortnight starting November 10, 2007.
- Ensure adequate statutory liquidity to meet the higher reserve requirement without default.
- Review loan and investment portfolios to adjust for reduced deployable funds.
- Update internal systems and reporting processes to reflect the revised CRR rate.
Who it affects
All Scheduled Primary (Urban) Co-operative Banks, Treasury and ALM teams of urban co-operative banks, RBI's Department of Banking Supervision (urban co-op banks)
What is the new CRR rate for urban co-operative banks?
The CRR is increased to 7.50% of demand and time liabilities, effective from the fortnight beginning November 10, 2007.
Which banks are covered by this circular?
All Scheduled Primary (Urban) Co-operative Banks are required to comply with this revised CRR.
When does this change take effect?
The new CRR applies from the fortnight starting November 10, 2007.