large scale image
LCP Image

Back to TSCFM News

RBI asks banks to temporarily maintain incremental CRR

August 17, 2023

RBI asks banks to temporarily maintain incremental CRR
The Reserve Bank of India (RBI) has asked banks to maintain an incremental Cash Reserve Ratio (ICRR) of 10 per cent on the increase in their deposits between May 19 and July 28 to suck out excess liquidity in the banking system.

The CRR, which is the cash parked by the banks in their specified current account maintained with RBI, however continues at 4.5 per cent of banks’ deposits.
 
“In recent years, our stated stance on liquidity is to maintain adequate liquidity in the system to meet the productive requirements of the economy. Excessive liquidity, on the other hand, can pose risks to price stability and also to financial stability.
 
“Hence, efficient liquidity management requires continuous assessment of the level of surplus liquidity so that additional measures are taken as and when necessary to impound the element of excess liquidity,” Governor Shaktikanta Das said.
 
Accordingly, it has been decided that with effect from the fortnight beginning August 12, 2023, scheduled banks shall maintain an incremental cash reserve ratio (I-CRR) of 10 per cent on the increase in their net demand and time liabilities (NDTL) or deposits between May 19, 2023 and July 28, 2023, he added.
 
Banking expert V Viswanathan said the growth in DTL between May 19th and July 28th has been ₹6.78 lakh crore. So, 10 per cent of this implies that liquidity amounting to ₹67,800 crore will be impounded.
 
Das observed that this measure is intended to absorb the surplus liquidity generated by various factors referred to earlier including the return of ₹2,000 notes to the banking system.
Important Links:

Recommended for you ...

Modi, Mauritius, and Sri Lanka Leaders Unveil Digital Payment Services
Modi, Mauritius, and Sri Lanka Leaders Unveil Digital Payment Services

February 12, 2024

Public Sector Banks Surpassing Private Peers, Investors Reconsidering Choices
Public Sector Banks Surpassing Private Peers, Investors Reconsidering Choices

February 12, 2024

Indian Banks Seek RBI Permission for Global Bond Trading Ahead of Inclusion in Indices
Indian Banks Seek RBI Permission for Global Bond Trading Ahead of Inclusion in Indices

February 12, 2024

Enquire Now
REQUEST A CALLBACK
Chat on WhatsApp