RBI Circular No: DBOD. No.Ret. BC.13/12.01.001/2011-12 (01-Jul-11) Master Circular - Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Dear Sir,
Please refer to the Master Circular RBI/2010-11/70 DBOD.No.Ret.BC.23/12.01.001/2010-11 dated July 01, 2010 updating instructions/guidelines issued to the Scheduled Commercial Banks (SCBs) on CRR/SLR till June 30, 2010. The Master Circular has been suitably updated by incorporating the instructions issued on the subject up to June 30, 2011. A copy of the updated Master Circular is enclosed. The Master Circular has also been placed on the RBI website (http://www.rbi.org.in).
Yours faithfully,
P.R. Ravi Mohan
Chief General Manager
Encls: as above
Master Circular - Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
Table of Contents
| 1 | Introduction |
| 1.1 | Cash Reserve Ratio (CRR) |
| 1.2 | Maintenance of CRR |
| 1.3 | Incremental CRR |
| 1.4 | Computation of Demand and Time Liabilities (DTL) |
| 1.5 | Demand Liabilities |
| 1.6 | Time Liabilities |
| 1.7 | Other Demand and Time Liabilities (ODTL) |
| 1.8 | Assets with the Banking System |
| 1.9 | Borrowings from abroad by banks in India |
| 1.10 | Arrangements with Correspondent Banks for Remittance Facilities |
| 1.11 | Liabilities not to be included for DTL/NDTL Computation |
| 1.12 | Exempted Categories |
| 1.13 | Loans out of Foreign Currency Non-Resident (FCNR)[B] Deposits and Inter-Bank Foreign Currency (IBFC) Deposits |
| 1.14 | Procedure for computation of CRR |
| 1.15 | Maintenance of CRR on daily basis |
| 1.16 | No Interest Payment on Cash Balances Maintained by Scheduled Commercial Banks (SCBs) with RBI under CRR |
| 1.17 | Fortnightly Return in Form A (CRR) |
| 1.18 | Penalties |
| 2 | Maintenance of Statutory Liquidity Ratio (SLR) |
| 2.1 | Procedure for Computation of SLR |
| 2.2 | Classification and Valuation of Approved Securities for SLR |
| 2.3 | Penalties |
| 2.4 | Return in Form VIII (SLR) |
| 2.5 | Correctness of Computation of DTL to be certified by Statutory Auditors |
| 3 | Annex-I |
| Annex-II | |
| 4 | Appendix |
A. Purpose - This master circular prescribes the broad details of the reserve requirements.
B. Classification - A statutory guideline issued by the RBI under Section 35A of the BR Act, 1949.
C. Previous Instructions - This master circular is a compilation of the instructions contained in the circulars issued by the Reserve Bank of India which is operational as on the date of this circular.
D. Scope of Application - This master circular is applicable to all Scheduled Commercial Banks (SCBs) excluding Regional Rural Banks.
E. Structure
-
Introduction
1.1 CRR
2.1 SLR
-
Guidelines
1.1 to 1.18 Procedure for computation of CRR
2.1 to 2.5 Procedure for computation of SLR
-
Annex
-
Appendix
1. Introduction
With a view to monitoring compliance of maintenance of statutory reserve requirements viz. CRR and SLR by the SCBs, the Reserve Bank of India has prescribed statutory returns i.e. Form A return (for CRR) under Section 42 (2) of the RBI Act, 1934 and Form VIII return (for SLR) under Section 24 of the Banking Regulation Act, 1949.
1.1 CRR
In terms of Section 42 (1) of the Reserve Bank of India Act, 1934 the Reserve Bank having regard to the needs of securing the monetary stability in the country, prescribes the CRR for SCBs without any floor or ceiling rate.
1.2 Maintenance of CRR
At present, effective from the fortnight beginning April 24, 2010, the CRR is prescribed at 6.00 per cent of a bank's total of DTL adjusted for the exemptions discussed in Sections 1.11 and 1.12.
1.3 Incremental CRR
In terms of Section 42(1-A) of RBI Act, 1934, the SCBs are required to maintain, in addition to the balances prescribed under Section 42(1) of the Act, an additional average daily balance, the amount of which shall not be less than the rate specified by the Reserve Bank in the notification published in the Gazette of India from time to time. Such additional balance will be calculated with reference to the excess of the total of DTL of the bank as shown in the Returns referred to in Section 42(2) of the Act, 1934 over the total of its DTL at the close of the business on the date specified in the notification.
At present no incremental CRR is required to be maintained by the banks.
1.4 Computati'on of DTL
Liabilities of a bank may be in the form of demand or time deposits or borrowings or other miscellaneous items of liabilities. As defined under Section 42 of the RBI Act, 1934, liabilities of a bank may be towards the banking system or towards others in the form of demand and time deposits or borrowings or other miscellaneous items of liabilities. The Reserve Bank of India has been authorized in terms of Section 42 (1C) of the RBI Act, 1934, to classify any particular liability and hence for any doubt regarding classification of a particular liability, banks are advised to approach the RBI for necessary clarification.
1.5 Demand Liabilities
Demand Liabilities of a bank are liabilities which are payable on demand. These include current deposits, demand liabilities portion of savings bank deposits, margins held against letters of credit/guarantees, balances in overdue fixed deposits, cash certificates and cumulative/recurring deposits, outstanding Telegraphic Transfers (TTs), Mail Transfer (MTs), Demand Drafts (DDs), unclaimed deposits, credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand. Money at Call and Short Notice from outside the Banking System should be shown against liability to others.
1.6 Time Liabilities
Time Liabilities of a bank are those which are payable otherwise than on demand. These include fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits, staff security deposits, margin held against letters of credit, if not payable on demand, deposits held as securities for advances which are not payable on demand and Gold deposits.
1.7 Other Demand and Time Liabilities (ODTL)
ODTL include interest accrued on deposits, bills payable, unpaid dividends, suspense account balances representing amounts due to other banks or public, net credit balances in branch adjustment account, any amounts due to the banking system which are not in the nature of deposits or borrowing. Such liabilities may arise due to items like (i) collection of bills on behalf of other banks, (ii) interest due to other banks and so on. If a bank cannot segregate the liabilities to the banking system, from the total of ODTL, the entire ODTL may be shown against item II (c) 'Other Demand and Time Liabilities' of the return in Form 'A' and average CRR maintained on it by all SCBs.
Participation Certificates issued to other banks, the balances outstanding in the blocked account pertaining to segregated outstanding credit entries for more than 5 years in inter-branch adjustment account, the margin money on bills purchased / discounted and gold borrowed by banks from abroad, also should be included in ODTL.
Cash collaterals received under collateralized derivative transactions should be included in the banks DTL/NDTL for the purpose of reserve requirements as these are in the nature of outside liabilities.
1.8 Assets with the Banking System
Assets with the banking system include balances with banks in current account, balances with banks and notified financial institutions in other accounts, funds made available to banking system by way of loans or deposits repayable at call or short notice of a fortnight or less and loans other than money at call and short notice made available to...
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