June 22, 2006
The Chief Executive Officers of
All Scheduled Primary (urban) Co-operative Banks
Dear Sir/Madam,
Maintenance of CRR on Exempted Categories
Please refer to paragraph 2.1.7(ii) of our Master
Circular UBD.BR(PCB).MC.No. 16.26.00/04-05 dated August 26, 2004 on CRR and
SLR.
2. In terms of the instructions contained
therein, every Scheduled Primary (Urban) Co-operative Bank is exempted from
maintaining average CRR on the following liabilities, subject to the maintenance
of statutory minimum CRR of 3 per cent on its total demand and time liabilities
as computed under section 42(1) of the Reserve Bank of India Act, 1934:
(i) Liabilities to the banking system in
India as computed under Clause (d) of the Explanation to Section 42(1) of the
RBI Act, 1934 and
(ii) Transactions in Collateralized Borrowing
and Lending Obligation (CBLO) with Clearing Corporation of India Ltd. (CCIL)
3. A reference is invited to our circular
UBD (PCB) Cir. No: 59/16.26.000/2005-2006 dated June 22, 2006 regarding
enactment of the Reserve Bank of India (Amendment) Bill 2006 and its coming
into force with effect from June 22, 2006. Consequent upon the amendment to
sub-section (1) of Section 42 of the Reserve Bank of India Act, 1934, the statutory
minimum CRR requirement of 3 percent of total demand and time liabilities no
longer exists.
4. Further, consequent upon the amendment
to sub-section (1) of Section 42 of the Reserve Bank of India Act, 1934, the
Reserve Bank having regard to the needs of securing monetary stability in the
country, can prescribe the Cash Reserve Ratio (CRR) for scheduled banks without
any floor rate or ceiling rate. Accordingly, Reserve Bank of India has decided
to continue with the status quo on the rate of CRR required to be maintained
by Scheduled Primary (Urban) Co-operative Bank at 5 per cent of their demand
and time liabilities , in terms of our circular UBD (PCB) Cir. No. 59 / 16.26.000
/2005-2006 dated June 22, 2006. It has also been decided to exempt the
liabilities referred to at paragraph 2 (i) and (ii) on the previous page from
the above CRR requirement of 5 per cent of the demand and time liabilities of
Scheduled Primary (Urban) Co-operative Bank.
5. A copy of the relative notification UBD
(PCB) No. 13276/16.26.000/2005-2006 dated June 22, 2006 is enclosed.
UBD (PCB) No. 13276/16.26.000/2005-2006
June 22, 2006
NOTIFICATION
Consequent upon the amendment to sub-section
(1) of Section 42 of the Reserve Bank of India Act, 1934 (2 of 1934), the statutory
minimum Cash Reserve Ratio (CRR) requirement of 3 per cent of the total demand
and time liabilities in respect of Scheduled Primary (Urban) Co-operative Bank
no longer exists with effect from June 22, 2006. Further, consequent upon the
amendment to sub-section (1) of Section 42 of the Reserve Bank of India Act,
1934, the Reserve Bank having regard to the needs of securing monetary stability
in the country, can prescribe the Cash Reserve Ratio (CRR) for Scheduled Primary
(Urban) Co-operative Bank without any floor rate or ceiling rate. In terms of
these powers, Reserve Bank of India has decided to continue with the status
quo on the rate of CRR required to be maintained by Scheduled Primary (Urban)
Co-operative Bank at 5 per cent of their demand and time liabilities. In exercise
of the powers conferred by sub-section (7) of Section 42 of the Reserve Bank
of India Act, 1934, the Reserve Bank of India hereby exempts every Scheduled
Primary (Urban) Co-operative Bank from the maintenance of CRR at 5 per cent
on the following liabilities with effect from June 22, 2006: