What changed
The Cash Reserve Ratio for all Scheduled Commercial Banks (excluding RRBs) was reduced from 4.75% to 4.50% of Net Demand and Time Liabilities. The change takes effect from the fortnight beginning September 22, 2012, as notified via circular DBOD.No.Ret.BC.44/12.01.001/2012-13.
What it means for you
Banks will now need to hold less cash with RBI, releasing around Rs 17,000 crore into the system. This improves liquidity, potentially lowering short-term rates and giving banks room to reduce lending rates or improve margins. It signals RBI's intent to support growth amid tight liquidity conditions.
What you must do
- Recalculate CRR maintenance for the fortnight starting Sept 22, 2012, using the new 4.50% rate on NDTL.
- Update internal systems and reporting templates to reflect the revised CRR requirement.
- Communicate the change to treasury and ALM teams to optimize liquidity deployment.
- Monitor call money and repo rates for potential easing due to increased liquidity.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Treasury and ALM departments, Lending and credit teams
When does the new CRR rate become effective?
The reduced CRR of 4.50% applies from the fortnight beginning September 22, 2012.
Which banks are covered by this circular?
All Scheduled Commercial Banks, excluding Regional Rural Banks (RRBs), must comply with the revised CRR.
What is the basis for calculating the CRR?
The CRR is calculated as a percentage of each bank's Net Demand and Time Liabilities (NDTL).