What changed
Earlier on October 7, 2008, RBI had reduced CRR by 50 bps from 9.00% to 8.50%. Now, after reviewing the liquidity situation, RBI deepened the cut to 150 bps, bringing CRR down to 7.50% of NDTL for Scheduled State Co-operative Banks, effective from the same fortnight beginning October 11, 2008.
What it means for you
This larger CRR reduction releases substantial additional funds for Scheduled State Co-operative Banks, easing their liquidity constraints. Banks can now deploy more resources for lending or meeting other obligations, supporting credit flow in the co-operative banking sector during a period of global financial turmoil.
What you must do
- Recalculate your CRR maintenance for the fortnight starting October 11, 2008 using the new 7.50% rate on NDTL.
- Update internal systems and reporting templates to reflect the revised CRR requirement.
- Inform your treasury and operations teams to adjust cash balances accordingly.
- Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
All Scheduled State Co-operative Banks, Treasury and operations teams of these banks, RBI regional offices handling co-operative banks
What is the new CRR rate for Scheduled State Co-operative Banks?
The CRR has been reduced by 150 basis points to 7.50% of net demand and time liabilities (NDTL), 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 liquidity pressures on Scheduled State Co-operative Banks.
Does this circular supersede the earlier October 7, 2008 circular?
Yes, this circular and the accompanying notification supersede the earlier notification dated October 7, 2008, which had announced a 50 bps reduction.