What changed
Previously, CBLO liabilities were exempt from CRR for scheduled state co-operative banks. Now, with effect from the fortnight starting November 21, 2009, these liabilities must be included in NDTL for CRR computation. The base for the first fortnight is the reporting Friday of November 6, 2009.
What it means for you
Scheduled state co-operative banks will face higher CRR requirements as CBLO liabilities are now part of NDTL. This increases their statutory reserve burden, potentially reducing lendable resources. Banks must adjust their liquidity management and reporting systems to comply from the specified fortnight.
What you must do
- Include liabilities from CBLO transactions with CCIL in NDTL for CRR from the fortnight beginning November 21, 2009.
- Use the reporting Friday of November 6, 2009 as the base for the first CRR computation under the new rule.
- Review and update internal systems to ensure only banking system liabilities as per Section 42(1)(e) of RBI Act are exempted.
- Communicate the change to treasury and compliance teams for accurate CRR maintenance.
Who it affects
Scheduled State Co-operative Banks, Treasury departments of StCBs, Compliance teams of StCBs
When does this CRR change take effect?
It takes effect from the fortnight beginning November 21, 2009, with the base NDTL computed from the reporting Friday of November 6, 2009.
Are all liabilities now subject to CRR?
No, liabilities to the banking system as defined under clause (e) of the Explanation to Section 42(1) of the RBI Act, 1934 remain exempt from CRR.
What triggered this change?
The change was announced in the Second Quarter Review of Monetary Policy 2009-10 released on October 27, 2009.