What changed
The Cash Reserve Ratio (CRR) for Scheduled State Co-operative Banks was reduced by 50 basis points, from 9.00% to 8.50% of net demand and time liabilities (NDTL). The change takes effect from the fortnight beginning October 11, 2008. This is an ad hoc, temporary measure subject to continuous review based on liquidity conditions.
What it means for you
This CRR cut releases additional funds for these banks, improving their liquidity position during a period of global and domestic financial stress. Banks can use the freed-up resources for lending or other operations, potentially supporting credit flow. However, the temporary nature means banks should not treat this as a permanent easing.
What you must do
- Adjust CRR maintenance calculations to reflect the new 8.50% rate from October 11, 2008 fortnight.
- Monitor liquidity conditions closely as the measure is temporary and subject to review.
- Acknowledge receipt of this circular to your respective Regional Office.
- Review lending and investment strategies to utilize freed-up funds effectively.
Who it affects
Scheduled State Co-operative Banks, RBI's Rural Planning and Credit Department (RPCD)
When does the reduced CRR take effect?
The new CRR of 8.50% applies from the fortnight beginning October 11, 2008.
Is this CRR reduction permanent?
No, it is an ad hoc, temporary measure and will be reviewed continuously based on evolving liquidity conditions.