What changed
RBI reduced CRR for RRBs by an additional 100 bps from 7.50% to 6.50% of NDTL, effective the fortnight starting October 11, 2008. Combined with the prior 150 bps cut, the total reduction is 250 bps from the original 9.00%.
What it means for you
RRBs now need to hold less cash with RBI, releasing significant liquidity for lending or investment. This eases pressure on rural credit flow and helps RRBs manage tight money market conditions. Banks should reassess their liquidity buffers and lending capacity.
What you must do
- Recalculate CRR maintenance at 6.50% of NDTL for the current fortnight.
- Adjust liquidity management strategies to deploy freed-up funds.
- Acknowledge receipt of the circular to your regional RBI office.
- Monitor evolving liquidity conditions for further policy changes.
Who it affects
All Regional Rural Banks (RRBs), RBI regional offices overseeing RRBs, Rural lending and deposit customers
What is the effective date for the new CRR rate?
The reduced CRR of 6.50% applies from the reporting fortnight that began on October 11, 2008.
Does this circular supersede the earlier CRR notification?
Yes, the October 15, 2008 notification supersedes the earlier one dated October 10, 2008, which had set CRR at 7.50%.