A Reserve Bank of India (RBI) logo is seen inside its headquarters in Mumbai. File
| Photo Credit: Reuters
The Reserve Bank of India has decided to discontinue the incremental Cash Reserve Ratio (I-CRR) in a phased manner.
“Based on an assessment of current and evolving liquidity conditions, it has been decided that the amounts impounded under the I-CRR would be released in stages so that system liquidity is not subjected to sudden shocks and money markets function in an orderly manner,” the RBI said in a circular.
While 25% of the I-CRR maintained would be released on September 9,2023, another 25% would be released on September 23,2023 and the balance 50% would be released on October 7, 2023.
The RBI Governor in his Monetary Policy Statement had announced that scheduled banks would require to maintain an I-CRR of 10% on the increase in their net demand and time liabilities (NDTL) between May 19, 2023 and July 28, 2023.
The measure was intended to absorb the surplus liquidity generated by various factors, including the return of ₹2000 notes to the banking system.
It was indicated that the I-CRR would be a temporary measure to manage the liquidity overhang and that it would be reviewed on September 8, 2023, or earlier, aiming to returning the impounded funds to the banking system ahead of the festival season.