Rs.1 lakh crore deposits to be released by RBI

Over the next month, nearly Rs.1 lakh crore held by the RBI since August would be gradually released to banks. The RBI has said that it will gradually phase out the requirement for banks to keep aside 10% of any additional funds received from deposits between May 19 and July 28.

According to the RBI, this procedure would be gradual until October 7 in order to protect system liquidity and ensure that money markets operate in an orderly manner.

Following the MPC meeting last month, the central bank imposed a 10% incremental cash reserve ratio (iCRR) requirement on deposits made after May 19, the date it announced the removal of the Rs.2,000 banknotes.

The central bank justified this by claiming that it was necessary to absorb the brief increase of cash in banks caused by the public’s rush to deposit Rs.2,000 notes.

According to the timetable published by the RBI, 25% of the iCRR money would be distributed on September 9, with the remaining 25% released on September 23. The remaining 50% would be made available on October 7.