What changed
The CRR for Scheduled State Co-operative Banks was increased by 75 basis points from 5.00% to 5.75% of NDTL. The hike was implemented in two stages: 5.50% effective from the fortnight beginning February 13, 2010, and 5.75% from February 27, 2010.
What it means for you
This CRR hike will reduce the lendable resources of Scheduled State Co-operative Banks, tightening liquidity. Banks must set aside more funds with RBI, impacting their profitability and ability to extend credit. The move aligns with RBI's monetary tightening stance to manage inflation.
What you must do
- Recalculate CRR requirements for each fortnight starting February 13 and February 27, 2010.
- Ensure adequate liquidity to maintain the higher CRR of 5.50% and then 5.75% of NDTL.
- Update internal systems and reporting processes to reflect the new CRR rates.
- Communicate the changes to treasury and compliance teams for smooth implementation.
Who it affects
Scheduled State Co-operative Banks, Treasury departments of StCBs, Compliance officers at StCBs
What is the new CRR rate for Scheduled State Co-operative Banks?
The CRR is increased to 5.50% from February 13, 2010, and further to 5.75% from February 27, 2010.
Why was this CRR hike implemented?
Based on the macroeconomic assessment in the Third Quarter Review of Monetary Policy 2009-10, RBI decided to increase CRR to manage liquidity and inflation.
When do the new CRR rates become effective?
The first stage (5.50%) is effective from the fortnight beginning February 13, 2010, and the second stage (5.75%) from the fortnight beginning February 27, 2010.