What changed
The Cash Reserve Ratio for scheduled commercial banks was reduced by 25 basis points, from 4.25% to 4.00% of net demand and time liabilities, effective the fortnight starting February 9, 2013. For local area banks, the CRR was set at 3.00% until February 8, 2013, and then raised to 4.00% from the same fortnight.
What it means for you
This CRR cut releases primary liquidity into the banking system, potentially lowering short-term interest rates and easing funding costs for banks. Banks will have more funds available for lending and investment, which could support credit growth and economic activity.
What you must do
- Recalculate CRR maintenance at 4.00% of NDTL for the fortnight beginning February 9, 2013.
- Ensure local area banks adjust CRR from 3.00% to 4.00% effective the same fortnight.
- Update internal systems and reporting templates to reflect the new CRR rate.
- Communicate the change to treasury and compliance teams for smooth implementation.
Who it affects
All scheduled commercial banks, Local area banks, Treasury departments, Compliance and risk management teams
When does the new CRR rate take effect?
The reduced CRR of 4.00% applies from the fortnight beginning February 9, 2013.
Does this apply to local area banks?
Yes, local area banks must maintain 3.00% CRR until February 8, 2013, and 4.00% from the fortnight starting February 9, 2013.
What is the basis for calculating CRR?
CRR is calculated as a percentage of net demand and time liabilities (NDTL).