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RBI scraps CRR exemption for reporting holidays

The Reserve Bank of India (RBI) has said that banks will no longer be exempt from maintaining the minimum cash reserve ratio (CRR) requirements on the days preceding reporting Fridays which fall on holidays.

"It has, therefore, been decided that in future no exemption would be permitted from the CRR requirements as laid down in case the reporting day happens to be a holiday or the RBI's account closing day," a circular posted on the central bank's website said.

"Accordingly, banks should carefully plan maintenance of CRR balances during the fortnights in which reporting Fridays are public holidays or RBI's account closing days," it said.

The circular said the change will come into effect immediately.

Banks in India maintain reserves over a two-weekly cycle. They are required to maintain a minimum of 65 per cent of the required CRR from the first to the 13th day, and report their balances to the central bank on alternate Fridays.

So far they had been allowed to maintain less than the minimum stipulated 65 per cent on the day preceding the reporting Friday, if the reporting day was a holiday or the central bank's account closing day.

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