What changed
RBI has decided to discontinue the incremental CRR (I-CRR) that was imposed on August 10, 2023. The impounded amounts will be released in a phased manner: 25% on September 9, 2023, another 25% on September 23, 2023, and the remaining 50% on October 7, 2023. The corresponding additional CRR maintenance requirements for the fortnights are reduced accordingly.
What it means for you
Banks will gradually get back the liquidity that was locked up under I-CRR, easing pressure on their cash reserves. This phased release aims to prevent sudden liquidity surges that could disrupt money markets. For lenders, this means improved ability to deploy funds for lending or investments over the next month.
What you must do
- Update your liquidity management plans to account for the phased release of I-CRR funds on the specified dates.
- Ensure your treasury team adjusts daily reserve calculations for the fortnights ending September 22 and October 6, 2023 as per the reduced additional CRR percentages.
- Monitor money market conditions closely to deploy the released liquidity optimally without causing rate volatility.
Who it affects
Scheduled Commercial Banks, Regional Rural Banks, Scheduled Primary (Urban) Co-operative Banks, Scheduled State Co-operative Banks
What is the exact schedule for I-CRR release?
25% of the I-CRR maintained will be released on September 9, 2023, another 25% on September 23, 2023, and the remaining 50% on October 7, 2023.
Do we still need to maintain any additional CRR after October 7?
No, from October 7, 2023 onwards, the additional average daily balance required under I-CRR becomes nil, meaning the requirement is fully discontinued.
Which banks are covered by this circular?
All Scheduled Commercial Banks, Regional Rural Banks, Scheduled Primary (Urban) Co-operative Banks, and Scheduled State Co-operative Banks are covered.