What changed
RBI lowered the Cash Reserve Ratio (CRR) for Scheduled State Co-operative Banks by 50 basis points, from 5.50% to 5.00% of net demand and time liabilities (NDTL). The change takes effect from the fortnight beginning January 17, 2009, superseding the previous CRR notification of November 3, 2008.
What it means for you
This CRR reduction injects additional liquidity into StCBs, enabling them to deploy more funds for lending or investment. It signals RBI's accommodative stance amid the 2008-09 global financial crisis, aiming to support credit flow and ease funding pressures for co-operative banks.
What you must do
- Recalculate CRR maintenance at 5.00% of NDTL from the fortnight starting January 17, 2009.
- Adjust daily cash reserve balances to comply with the new lower requirement.
- Acknowledge receipt of this circular to your respective Regional Office.
- Review liquidity position to leverage freed-up funds for lending or other deployment.
Who it affects
Scheduled State Co-operative Banks, Treasury and ALM teams at StCBs, RBI's Rural Planning and Credit Department
What is the effective date for the new CRR rate?
The reduced CRR of 5.00% applies from the fortnight beginning January 17, 2009.
Does this circular apply to all co-operative banks?
No, it specifically applies to Scheduled State Co-operative Banks (StCBs), not other co-operative banks.
What was the previous CRR rate before this change?
The previous CRR was 5.50% of NDTL, as set in the November 3, 2008 circular.