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RBI hikes CRR for unscheduled UCBs

The Reserve Bank of India has increased the cash reserve ratio (CRR) for non-scheduled urban cooperative banks by 100 basis points to 4%. This increase will come into effect from 12 July. The move will bring non-scheduled UCBs on par with scheduled primary UCBs. There are some 1,500 unscheduled UCBs in India. CRR is a portion of a bank’s deposits that the lender needs to maintain with RBI. This money earns no interest. The current CRR level is 4%. To bring the primary UCBs on par with commercial banks, the central bank reduced the statutory liquidity ratio (SLR) requirement for them by 50 basis points to 22.50%. SLR is a percentage of a bank’s deposits that it needs to deploy in gold, government bonds and securities. RBI has reduced the SLR requirement of banks to 22.5%.

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