What changed
Earlier on October 7, 2008, RBI had reduced CRR for RRBs by 50 bps from 9.00% to 8.50%. Now, after reviewing liquidity conditions, RBI deepened the cut to 150 bps, bringing CRR directly to 7.50% of NDTL, superseding the previous notification.
What it means for you
RRBs will have substantially more deployable funds as the reserve requirement drops sharply. This move aims to ease tight liquidity and support lending in rural and semi-urban areas. Banks can use the freed cash to boost credit flow or manage their own liquidity positions better.
What you must do
- Recalculate your CRR maintenance for the fortnight beginning October 11, 2008 at 7.50% of NDTL.
- Adjust your cash reserve holdings accordingly and release the excess liquidity into operations.
- Acknowledge receipt of this circular to your respective RBI Regional Office.
- Update internal systems and reporting to reflect the revised CRR rate immediately.
Who it affects
All Regional Rural Banks (RRBs), RBI Regional Offices monitoring RRB compliance
What is the new CRR rate for RRBs and when does it take effect?
The CRR for RRBs is reduced to 7.50% of net demand and time liabilities, effective from the fortnight beginning October 11, 2008.
Why did RBI increase the CRR cut from 50 bps to 150 bps?
RBI reviewed the evolving liquidity situation amid global and domestic developments and decided a deeper cut was needed to ease pressure, as stated in the accompanying press release.