Cash Reserve Ratio (CRR)
Cash Reserve Ratio (CRR) is the amount of funds that all Scheduled Commercial Banks (SCB) excluding Regional Rural Banks (RRB) are required to maintain without any floor or ceiling rate with RBI with reference to their total net Demand and Time Liabilities (DTL) to ensure the liquidity and solvency of Banks (Section 42 (1) of RBI Act 1934). The current CRR is 4.75% and at present no incremental CRR is required to be maintained by the banks. Computation of DTL
Demand Liabilities are liabilities which are payable on demand and Time Liabilities are those which are payable otherwise than on demand. The components for computation of DTL include Demand Liabilities, Time Liabilities and Other Demand & Time Liabilities (ODTL) as under:- a) Demand Liabilities:-
Current Deposits, Savings bank deposits, Margins held against letters of credit/guarantees, Balances in overdue fixed deposits, Outstanding TTs, MTs, DDs, Unclaimed deposits, Credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand, & Money at Call and Short Notice from outside the Banking System (Liability to others).
b) Time Liabilities:-
Fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits, staff security deposits, margin held against letters of credit, if not payable on demand, & deposits held as securities for advances which are not payable on demand and Gold deposits.
c) Other Demand and Time Liabilities (ODTL):-
Interest accrued on deposits, bills payable, unpaid dividends, suspense account balances representing amounts due to other banks or public, net credit balances in branch adjustment account, any amounts due to the banking system which are not in the nature of deposits or borrowing.
Participation Certificates issued to other banks, the balances outstanding in the blocked account pertaining to segregated outstanding credit entries for more than 5 years in inter-branch adjustment account, the margin money on bills purchased / discounted and gold borrowed by banks from abroad, Cash collaterals received under collateralized derivative transactions and Loans/borrowings from abroad. Liabilities not included under DTL/ODTL
a) Paid up capital, reserves, credit balance in the Profit & Loss Account, loan taken from the RBI, refinance taken from Exim Bank, NHB, NABARD, SIDBI; b) Net income tax provision; 2
c) Amount received from DICGC towards claims pending adjustments thereof; d) Amount received from ECGC
e) Amount received from insurance company on ad-hoc settlement of claims pending judgment of the Court;
f) Amount received from the Court Receiver;
g) The liabilities arising on account of utilization of limits under Bankers Acceptance Facility (BAF);
h) District Rural Development Agency (DRDA) subsidy of Rs.10, 000/- kept in Subsidy Reserve Fund account in the name of Self Help Groups.
i) Subsidy released by NABARD under Investment Subsidy Scheme for Construction/Renovation/Expansion of Rural Godowns;
j) Net unrealized gain/loss arising from derivatives transaction under trading portfolio; k) Income flows received in advance such as annual fees and other charges which are not refundable.
l) Bill rediscounted by a bank with eligible financial institutions as approved by RBI and, (m) Provision not being a specific liability arising from contracting additional liability and created from profit and loss account.
a) Liabilities to the banking system in India
b) Credit balances in ACU (US$) Accounts;
c) Demand and Time Liabilities in respect of their Offshore Banking Units (OBU) d) Inter-bank term deposits/term borrowing liabilities of original maturities of 15 days and above and up to one year, and
e) Inter-bank assets of term deposits and term lending of original maturity of...