What changed
Previously, RRBs used FEDAI indicative rates at 12 noon for four major currencies to determine rupee equivalent liabilities under FCNR(B) for CRR. Now, they must use the RBI Reference Rate announced on the RBI website at around 12:30 pm for converting foreign assets/deposits in Form A Return.
What it means for you
This aligns RRBs with the standard reference rate used by other banks, reducing discrepancies in CRR calculations. It ensures uniformity in reporting and may affect liquidity management for RRBs, as the RBI Reference Rate can differ from FEDAI rates.
What you must do
- Update internal systems to use RBI Reference Rate (12:30 pm) for FCNR(B) CRR calculations from July 13, 2012.
- Train staff on the new conversion rate source for Form A Return reporting.
- Review existing FCNR(B) deposits to ensure compliance with the revised CRR computation method.
Who it affects
Regional Rural Banks (RRBs), Treasury and compliance teams at RRBs, RBI's rural banking supervision division
Why did RBI change the rate source for CRR on FCNR(B)?
To standardize the conversion rate across all banks, reducing arbitrage and ensuring consistent CRR reporting. The RBI Reference Rate is a single, authoritative rate published daily.
Does this apply to all foreign currency deposits or only FCNR(B)?
The circular specifically addresses FCNR(B) deposits for CRR purposes. Other foreign currency liabilities may follow separate guidelines.
What happens if an RRB continues using FEDAI rates after July 13, 2012?
Non-compliance could lead to incorrect CRR maintenance and potential penalties under Section 42 of the RBI Act, 1934.