UCBs - Change in Daily Minimum Cash Reserve Maintenance Requirement

RBI/2013-14/159
UBD.BPD. (SCB). CIR. No. 1 /12.03.000/2013-14

July 24, 2013

The Chief Executive Officers of
All Scheduled Primary (Urban) Co-operative Banks

Madam/Dear Sir,

Section 42(1) of the  Reserve Bank of India Act, 1934 – Change in
Daily Minimum Cash Reserve Maintenance Requirement

Please refer to Press Release 2013-2014/154 dated July 23, 2013, announcing additional measures to address foreign exchange market volatility.

2. As mentioned therein, currently, banks are allowed to maintain a minimum of 70 per cent of the required Cash Reserve Ratio (CRR) during a fortnight, which is applicable on all days of the reporting fortnight. It has now been decided to increase the requirement of minimum daily CRR balance maintenance to 99 per cent effective from the first day of the fortnight beginning July 27, 2013.

Yours faithfully,

(A.K.Bera)
Principal Chief General Manager

______________

For Press Release 2013-2014/154 dated July 23, 2013

RBI announces Additional measures to address Exchange Market Volatility

Over the last two months, the Reserve Bank of India (RBI) has undertaken several measures to contain the volatility in the foreign exchange market. Among them, some measures intended to check excessive speculation adding to undue volatility in market conditions were instituted vide the RBI's Press Release No.2013-2014/100 dated July 15, 2013. These measures have had a restraining effect on volatility with a concomitant stabilising effect on the exchange rate. Based on a review of the measures, and an assessment of the liquidity and overall market conditions going forward, it has been decided to modify the liquidity tightening measures as follows:

• The overall limit for access to LAF by each individual bank is set at 0.5 per cent of its own NDTL outstanding as on the last Friday of the second preceding fortnight. This measure will come into effect immediately, i.e., from July 24, 2013 and will remain in force until further notice.
• Currently, banks are allowed to maintain their Cash Reserve Ratio (CRR) prescribed by the RBI on an average daily basis during a reporting fortnight, with a minimum of 70 per cent of the required CRR on a daily basis. Effective from the first day of the next reporting fortnight i.e., from July 27, 2013, banks will be required to maintain a minimum daily CRR balance of 99 per cent of the requirement.

Detailed guidelines regarding these measures are being issued separately.

Alpana Killawala
Chief General Manager