CRR Cut for Urban Co-op Banks: 250 bps Reduction to 6.5%
Current · Source: Reserve Bank of India · RBI/2008-2009/239 · issued 16 Oct 2008 · ~1 min read
Quick answerRBI slashed CRR for Scheduled Primary (Urban) Co-operative Banks by 100 bps more, totaling 250 bps from 9% to 6.5% of NDTL, effective fortnight starting October 11, 2008. This follows a 150 bps cut on October 10, 2008, to ease liquidity.
The rule, in the simplest words
Urban Co-operative Banks must keep only 6.5% of their customers' total deposits (NDTL) as cash with RBI, down from 9%.
This 250 basis points cut (100 bps on top of a 150 bps cut) started from the fortnight beginning October 11, 2008.
Banks now have more cash free to lend to people or invest, because they need to hold less money with RBI.
How it plays out — a real example
A co-operative bank branch officer in Indore, Priya, checks the new CRR rule and sees her bank now only needs to keep 6.5% of deposits with RBI instead of 9%. She tells her branch manager they can use the freed-up cash to approve more gold loans for local farmers, helping them buy seeds before the next planting season.
What changed
RBI further reduced CRR for Urban Co-operative Banks by 100 basis points from 7.5% to 6.5% of NDTL, effective from the reporting fortnight beginning October 11, 2008. This is in addition to the 150 bps cut announced on October 10, 2008, bringing the total reduction to 250 bps from the earlier 9%.
What it means for you
Urban Co-operative Banks now need to hold less cash with RBI, freeing up funds for lending or investment. This aggressive CRR cut signals RBI's intent to inject liquidity into the banking system amid evolving tight conditions. For these banks, lower CRR directly improves their lendable resources and profitability.
What you must do
Recalculate CRR maintenance at 6.5% of NDTL for the current fortnight starting October 11, 2008.
Adjust liquidity management strategies to deploy freed-up funds optimally.
Acknowledge receipt of this circular to RBI as instructed.
Monitor further RBI communications on liquidity measures.
Who it affects
All Scheduled Primary (Urban) Co-operative Banks, Treasury and ALM teams at Urban Co-operative Banks, RBI's Department of Banking Supervision (UBD)
❓ Common questions
How much total CRR cut has been implemented in October 2008?
A total reduction of 250 basis points: 150 bps on October 10, 2008 (from 9% to 7.5%), and an additional 100 bps effective from the fortnight beginning October 11, 2008 (from 7.5% to 6.5%).
📜 Read the original circular — full text as issued by RBI
RBI/2008-2009/239
Ref: UBD (PCB).No./7 /12.03.000/2008-09
October 16, 2008
The Chief Executive Officers of
All Scheduled Primary (Urban) Co-operative Banks
Dear Sir,
Section 42(1) of Reserve Bank of India Act, 1934-
Maintenance of Cash Reserve Ratio (CRR)
Please refer to our Circular RBI 2008-2009/216 UBD (PCB) Cir. No.5/ 12.03.000/ 2008-09 dated October 10, 2008 on the captioned subject advising reduction in Cash Reserve Ratio (CRR) by 150 basis points from 9.00 per cent to 7.50 per cent of net demand and time liabilities with effect from October 11, 2008.
2. On a review of the evolving liquidity situation and as set out in the RBI Press Release 2008-2009/500 dated October 15, 2008,ithas been decided to further reduce the Cash Reserve Ratio (CRR) for Scheduled Primary (Urban) Co-operative Banks by 100 basis points from 7.50 per cent to 6.50 per cent of their NDTL with effect from the current reporting fortnight that began on October 11, 2008.
3. A copy of the relative notification UBD (PCB) No/6/12.03.000/2008-09 dated October 16, 2008 is enclosed.
4. Please acknowledge receipt.
Yours faithfully,
( A.K.Khound )
Chief General Manager in Charge
UBD(PCB)No/ 6/12.03.000/2008-09
October 16, 2008
NOTIFICATION
In exercise of the powers conferred under the Sub-section (1) of Section 42 of the Reserve Bank of India Act, 1934, and in supersession of its notification UBD(PCB)No./3/12.03.000/2008-09 dated October 10, 2008 , the Reserve Bank of India hereby notifies that the average Cash Reserve Ratio (CRR) required to be maintained by every Scheduled Primary (Urban) Co-operative Bank shall be reduced by 250 basis points to 6.50 per cent of its net demand and time liabilities from the fortnight beginning from October 11, 2008.
( V. S. Das )
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-2009/239 · issued 16 Oct 2008. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Primary (Urban) Co-operative Banks, Treasury and ALM teams at Urban Co-operative Banks, RBI's Department of Banking Supervision (UBD)), your first concrete step on “CRR Cut for Urban Co-op Banks: 250 bps Reduction to 6.5%” is: “Recalculate CRR maintenance at 6.5% of NDTL for the current fortnight starting October 11, 2008.” (RBI issued this 16 Oct 2008).
Circular: RBI/2008-2009/239 -- CRR Cut for Urban Co-op Banks: 250 bps Reduction to 6.5%
Issued: 16 Oct 2008
Action required: Recalculate CRR maintenance at 6.5% of NDTL for the current fortnight starting October 11, 2008.
Action required: Acknowledge receipt of this circular to RBI as instructed.
Action required: Monitor further RBI communications on liquidity measures.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4564&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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