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RBI/2006-2007109
UBD.(PCB-)Cir.No.6/16.26.000/2006-2007
August 16,2006
The Chief Executive Officers
of
All Scheduled Primary
(Urban) Co-operative Banks
Dear Sir/Madam,
Section 42(1) of Reserve
Bank of India Act, 1934 – Maintenance of CRR
Please refer
to our circular RBI
/2005-006/426. UBD (PCB) Cir.No.59/16.26.000/2005-2006 dated June 22,2006
on the captioned subject, wherein it was advised that the Reserve Bank will
not be paying any interest on the CRR balances maintained by Scheduled Primary
(Urban) Co-operative Bank's with effect from the fortnight beginning June 24,2006.
2. Consequently,
with effect from the fortnight beginning June 24,2006 penal interest will be
charged as under in cases of default in maintenance of CRR by Scheduled Primary
(Urban) Co-operative Banks:
(i) In case
of default in maintenance of CRR requirement on a daily basis, which is presently
70% of the total Cash Reserve Ratio 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 and 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.
(ii) In
cases of default in maintenance of CRR on average basis during a fortnight,
penal interest will be recovered as envisaged in sub-section (3) of Section
42 of Reserve Bank of India Act, 1934
Yours faithfully,
(N.S.Vishwanathan)
Chief General Manager-in-Charge |