RBI hikes penalty for breach of CRR, SLR norms by banks

18 Sep 2009

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The Reserve Bank of India (RBI) will charge penal interest of up to 5 per cent above the Bank Rate on scheduled commercial banks in cases of default in maintenance of cash reserve ratio (CRR) and statutory liquidity ratio (SLR) from the fortnight beginning 24 June 2006.

RBI has directed SCBs to strictly follow the norms on maintenance of cash reserve ratio and statutory liquidity ratio in order to avoid penalties.

In cases of default in maintenance of CRR requirement on a daily basis, which is currently 70 per cent of the total CRR requirement, penal interest will be recovered for that day at the rate of three per cent per annum above the Bank Rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day. If the shortfall continues on the next succeeding day/s, penal interest will be recovered at a rate of five per cent per annum above the Bank Rate, RBI said.

In cases of default in maintenance of CRR on average basis during a fortnight, penal interest will be recovered as envisaged in the RBI regulations, it said.

SCBs are required to furnish particulars such as date, amount, percentage, reason for default in maintenance of requisite CRR and also action taken to avoid recurrence of such default.

RBI prescribes the statutory liquidity ratio (SLR) for SCBs in specified assets. The value of such assets of a SCB shall not be less than such percentage and not exceeding 40 per cent of its total demand and time liabilities in India as of the last Friday of the second preceding fortnight.

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