The Reserve Bank of India (RBI) has extended the relaxation relating to maintenance of cash reserve ratio (CRR) by all scheduled banks for a further period of three months up to September 25, 2020.

The central bank also extended the relaxation relating to enhanced borrowing limit for the aforementioned banks under the Marginal Standing Facility (MSF) scheme till September 30, 2020.

When it comes to CRR relaxation, Banks can continue to maintain minimum daily CRR balance of 80 per cent with the RBI.

CRR is the slice of deposits that banks have to maintain with the central bank. Currently, the CRR is at 3 per cent of a bank’s deposits.

The central bank, in its March 27 Developmental and Regulatory Policies Statement, had reduced the requirement of minimum daily CRR balance maintenance from 90 per cent to 80 per cent effective from the first day of the reporting fortnight beginning March 28, 2020. This one-time dispensation was initially available up to June 26, 2020.

The CRR dispensation has been given keeping in view the continuing hardships faced by banks in terms of social distancing of staff and consequent strains on reporting requirement, the RBI said.

CRR is the slice of deposits that banks have to maintain with the central bank. Currently, the CRR is at 3 per cent of a bank’s deposits.

On March 27, the RBI had announced an increase in the borrowing limit of scheduled banks under the MSF scheme, by dipping into the prescribed statutory liquidity (SLR), from 2 per cent to 3 per cent of their deposits outstanding at the end of the second preceding fortnight with immediate effect. This relaxation was available up to June 30, 2020.

So, following the extension in relaxation, Banks can continue to avail overnight liquidity up to 3 per cent of their respective deposits outstanding at the end of the second preceding fortnight at 4.25 per cent interest.

SLR is the slice of deposits that banks have to invest in government and state government securities. Currently, SLR is 18 per cent of a bank’s deposits.

Published on June 27, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.

In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.

Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism