Rationale behind the CRR?

since the capital gets reduced, it is to fill in the capital lost by way of buy back, etc

thanks sunny.

if that is the case, then why not CRR is made mandatory only when the buyback is funded out of free reserves.

the wording indicates that CRR should be made when BB is funded out of free reserves but it is silent when BB is funded by other ways like securities premmium proceeds etc

any clue in that point of view?

please clarify

good question,.. actually speaking, such transfer to CRR is required in case BB is out of security premium account as share capital gets reduced irrespective of source of buy back .. but law does not provide for the same.. 

There cannot be any logic, but i think it has been left in law due to inadvertance.. 

YES SUNNY you are right

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