RBI to now prescribe CRR to banks without ceiling/ floor rate

Mumbai, June 23 (UNI) The Reserve Bank of India (RBI) can now prescribe cash reserve ratio (CRR) to scheduled banks without any floor rate or ceiling rate, as per the needs of securing monetary stability in the country.

To this effect, the RBI enacted Reserve Bank of India (Amendment) Bill, 2006 has come into force, with its gazette notification.

Accordingly, some changes in the provisions relating to CRR have been carried out.

Prior to the enactment of this amendment, the Reserve Bank could prescribe CRR for scheduled banks between 3 to 20 per cent of total of their demand and time liabilities.

At present, banks have to maintain a minimum of 70 per cent of the average daily CRR balances in a fortnight.

In light of the enactment of the Bill, the Reserve Bank has decided to constitute an internal technical group to undertake an overall review of the 'system' and draw out a medium-term roadmap.

It has also been decided to continue with the status quo on the existing provisions of CRR maintenance, including the CRR rate and extant exemptions, which will be operative till further change.

Accordingly, scheduled banks shall continue to maintain CRR of five per cent of their total demand and time liabilities.

Pursuant to the amendment, the erstwhile statutory minimum CRR maintenance requirement of three per cent no longer exists and appropriate notifications are being issued separately.

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