What changed
Previously, banks could keep as low as 70% of the required CRR on any day of the fortnight. The RBI has now raised this floor to 99%, effective from the fortnight starting July 27, 2013.
What it means for you
Urban co-operative banks will have far less flexibility in managing daily cash balances, as nearly the entire CRR must be maintained each day. This could strain short-term liquidity and increase the need for precise cash flow forecasting.
What you must do
- Review and adjust daily cash management processes to ensure 99% CRR compliance from July 27.
- Update internal liquidity monitoring systems to flag any intra-fortnight shortfalls.
- Communicate the new requirement to treasury and operations teams immediately.
- Assess impact on short-term borrowing and investment strategies.
Who it affects
All Scheduled Primary (Urban) Co-operative Banks, Treasury and cash management departments, Compliance and risk management teams
What was the previous minimum daily CRR maintenance requirement?
Banks were allowed to maintain a minimum of 70% of the required CRR on all days of the reporting fortnight.
When does the new 99% requirement take effect?
It is effective from the first day of the fortnight beginning July 27, 2013.
Why did RBI make this change?
The circular references a press release on additional measures to address foreign exchange market volatility.