What changed
The CRR for Scheduled State Co-operative Banks was reduced by an additional 100 basis points, bringing the total reduction to 250 bps from 9.00% to 6.50% of NDTL. The new rate applies from the fortnight beginning October 11, 2008, superseding the earlier notification of October 10, 2008.
What it means for you
This sharp CRR cut injects significant liquidity into Scheduled StCBs, freeing up funds for lending and easing tight cash conditions. For banks, it lowers the cost of maintaining reserves and supports credit flow to priority sectors, but may pressure deposit rates as liquidity expands.
What you must do
- Recalculate CRR maintenance at 6.50% of NDTL for the current fortnight starting October 11, 2008.
- Adjust liquidity management strategies to deploy freed-up funds effectively.
- Acknowledge receipt of this circular to your respective Regional Office.
- Monitor evolving RBI guidance for further liquidity measures.
Who it affects
Scheduled State Co-operative Banks, Treasury and ALM teams at StCBs, RBI Regional Offices overseeing StCB compliance
What is the new CRR rate for Scheduled State Co-operative Banks?
The CRR is reduced to 6.50% of net demand and time liabilities, effective from the fortnight beginning October 11, 2008.
How does this differ from the previous CRR cut?
This is an additional 100 bps reduction on top of the 150 bps cut announced on October 10, 2008, making a total reduction of 250 bps from 9.00% to 6.50%.
Which banks are covered by this notification?
All Scheduled State Co-operative Banks are required to maintain the reduced CRR as per Section 42(1) of the RBI Act, 1934.