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RBI/2006-2007/106
DBOD. No. Ret. BC.26/12.01.001/2006-07
August 10, 2006
All Scheduled Commercial Banks
(excluding Regional Rural Banks)
Dear Sir,
Section 42 (1) of Reserve Bank of India Act, 1934 - Penalties
on default in maintenance of Cash Reserve Ratio (CRR)
Please refer to our circular RBI/2005-2006/422.
DBOD.No.Ret.BC.91/12.01.001/2005-2006
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 Commercial 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 Commercial Banks:
(i) In cases 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,
(Malvika Sinha)
General Manager.
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