What changed
Previously, banks could maintain as low as 70% of required CRR on any day of the fortnight. Effective July 27, 2013, this floor was raised to 99%, meaning banks must now hold nearly the entire CRR amount daily.
What it means for you
This tightens liquidity management for banks, as they can no longer dip into CRR buffers on low-reserve days. It forces more precise daily cash planning and may increase demand for overnight funds, potentially raising short-term rates. The move was part of broader measures to stabilize the rupee.
What you must do
- Review daily cash flow forecasts to ensure CRR balances never fall below 99% of required reserves.
- Adjust intra-fortnight liquidity strategies to avoid penalties for shortfalls.
- Coordinate with treasury to arrange overnight borrowing if needed to meet the higher daily threshold.
- Update internal systems and reporting to reflect the new 99% maintenance requirement.
Who it affects
All scheduled commercial banks (excluding RRBs), Treasury and ALM desks, Liquidity management teams
What was the previous daily minimum CRR requirement?
Banks were allowed to maintain a minimum of 70% of required CRR on any day of the fortnight.
When does the new 99% requirement take effect?
It applies from the first day of the fortnight beginning July 27, 2013.
Why did RBI make this change?
The circular states it was part of additional measures to address exchange market volatility.