DBOD.No.BC.86/12.01.001/98-99 August 20, 1998 Shravana 29, 1920 (Saka) To All Scheduled Commercial
Banks (excluding Regional Rural Banks) Dear Sir, Section 42(1) of the RBI
Act, 1934 - Increase in Cash Reserve Ratio Please refer to the Circular
No. MPD/BC/180/07.01.279/98-99 dated August 20, 1998 from our Monetary Policy
Department. On a review of the current foreign exchange and monetary
conditions, it has been decided to effect an increase in Cash Reserve Ratio
(CRR) as detailed below, as a temporary measure. 2. Increase in Cash Reserve
Ratio (CRR) Under Section 42(1) of the
Reserve Bank of India Act, 1934 all Scheduled Commercial Banks [excluding
Regional Rural Banks (RRBs)] are, at present, required to maintain with the
Reserve Bank of India a Cash Reserve Ratio (CRR) of 10.0 per cent of the Net
Demand and Time Liabilities (NDTL) (excluding liabilities subject to Zero CRR
prescription). Effective from the fortnight beginning August 29, 1998, the
CRR to be maintained by Scheduled Commercial Banks (excluding RRBs) is being
increased by one percentage point from 10.0 percent to 11.0 percent of NDTL. 3. It may be mentioned
that all other prescriptions regarding maintenance of incremental CRR under
Section 42(1A) of the Reserve Bank of India Act, 1934 would continue. 4. A copy of the relative
notification DBOD No. BC 85/12.01.001/98-99 dated August 20, 1998 is
enclosed. 5. We may reiterate that in
view of the multiple prescriptions on different categories of liabilities
including Zero prescription of CRR on certain liabilities as stipulated under
the law, effective CRR maintained by scheduled commercial banks on total Net
Demand and Time Liabilities should not be less than 3 percent. Yours faithfully (N.K. Sarkar) General Manager |