Banks asked by RBI to temporarily maintain incremental CRR

Earlier in the day, India’s Monetary Policy Committee maintained key policy rates constant, although RBI Governor Shaktikanta Das instructed banks to maintain an incremental cash reserve requirement (CRR) of 10% on deposits increased between May 19 and July 28, with effect from the week beginning August 12. RBI notified this via issuing Notification.

Under Section 42(1) of the Reserve Bank of India Act, 1934, all Scheduled Banks are required to maintain with Reserve Bank of India a Cash Reserve Ratio (CRR) of 4.50 per cent of Net Demand and Time Liabilities (NDTL).

Following a review of current liquidity conditions, it has been decided to issue a directive under Section 42(1A) of the Reserve Bank of India Act, 1934 requiring all Scheduled Commercial Banks / Regional Rural Banks / Scheduled Primary (Urban) Co-operative Banks / Scheduled State Co-operative Banks to maintain with the Reserve Bank of India an incremental CRR (I-CRR) of 10% on the increase in NDTL bet, effective from the fortnight beginning August 12, 20 The I-CRR will be evaluated on or before September 8, 2023.