Professional Documents
Culture Documents
unclaimed deposits,
Cash Certificates,
Gold Deposits.
Paid up capital, reserves, any credit balance in the Profit & Loss
Account of the bank, amount of any loan taken from the RBI and the
amount of refinance taken from Exim Bank, NHB, NABARD, SIDBI;
Net income tax provision;
Amount received from
◦ DICGC towards claims and held by banks pending adjustments
thereof;
◦ ECGC by invoking the guarantee;
◦ insurance company on ad-hoc settlement of claims pending
judgment of the Court
Net unrealized gain/loss arising from derivatives transaction under
trading portfolio;
Income flows received in advance such as annual fees and other
charges which are not refundable.
Bill rediscounted by a bank with eligible financial institutions as
approved by RBI
SCBs are exempted from maintaining CRR on the
following liabilities:
Demand and Time Liabilities in respect of their
Offshore Banking Units (OBU);and
Inter-bank term deposits/term borrowing
liabilities of original maturities of 15 days and
above and up to one year in "Liabilities to the
Banking System”
Similarly banks should exclude their inter-bank
assets of term deposits and term lending of
original maturity of 15 days and above and up to
one year in "Assets with the Banking System"
Interest accrued on these deposits is also
exempted from reserve requirements.
In order to improve cash management by
banks, as a measure of simplification, a lag of
one fortnight in the maintenance of
stipulated CRR by banks has been introduced
with effect from the fortnight beginning
November 06, 1999.
RBI uses CRR to:
Drain excess liquidity or
Release funds needed for the growth of the
economy from time to time.
Higher the ratio (i.e. CRR), the lower is the
amount that banks will be able to use for
lending and investment.
This power of RBI to reduce the lendable amount by
increasing the CRR, makes it an instrument in the
hands of a central bank through which it can
control the amount that banks lend.
Thus, it is a tool used by RBI to control liquidity in
the banking system.
0
2
4
6
8
12
14
16
10
5-Jul-35
11-Nov-…
8-Sep-73
14-Dec-…
13-Nov-…
5-Jun-79
27-Nov-…
9-Apr-82
29-Jul-83
4-Feb-84
26-Oct-85
23-May-…
2-Jul-88
4-May-91
8-Oct-92
11-Jun-94
11-Nov-…
11-May-…
9-Nov-96
Rate
25-Oct-97
17-Jan-98
29-Aug-…
6-Nov-99
22-Apr-00
24-Feb-01
3-Nov-01
16-Nov-…
2-Oct-04
6-Jan-07
14-Apr-07
10-Nov-…
24-May-…
30-Aug-…
25-Oct-08
13-Feb-10
28-Jan-12
Current Status:4.00% (wef 27th Feb 2015)
Rate
Demand
customers for goods
borrow less and
to maintain and services
profit eventually thus comes
margin spend less down
Banks banks
have less increase
money lending
Increase in for rates
CRR lending
10
5-Feb-70
24-Apr-70
28-Aug-70
4-Aug-72
17-Nov-72
8-Dec-73
1-Jul-74
1-Dec-78
25-Sep-81
30-Oct-81
28-Jul-84
1-Sep-84
8-Jun-85
6-Jul-85
25-Apr-87
2-Jan-88
22-Sep-90
Rate
29-Feb-92
9-Jan-93
6-Feb-93
6-Mar-93
21-Aug-93
18-Sep-93
16-Oct-93
20-Aug-94
17-Sep-94
29-Oct-94
25-Oct-97
8-Nov-08
Current rate:21.5% as on 27th Feb 2015
7-Nov-09
18-Dec.-2010
11th…
Rate
For Against
• Will Improve Credit Flow To Private Cos • Will Adversely Impact Fiscal Deficit
• Focus Should Be To Boost Participation Of • Indian Banks Have Been Able To Withstand
The Private Sector By Providing Ready The Global Storm Due To These Prudent
Access To Debt Finance Instead Of Polices Of The Reserve Bank Of India
Redistributing Liquidity Artificially In Favour
Of The Government Sector
• Higher SLR Increases Market Risk For Banks • In The Current Context, Worldwide Banks
Due To The Sheer Size Of Holdings Of Price- Are Being Criticised For Having Risky Asset
sensitive Securities Portfolios, There Is A Perceptible Shift Among
Banks’ Asset Portfolios From Credit And
Other Derivative Instruments To Holdings Of
Sovereign Government Bonds.