RBI Introduces Incremental CRR To Manage Excess Liquidity In Banking System

In order to absorb the surge in liquidity in banking system following demonetisation of high value notes, the Reserve Bank introduced an incremental Cash Reserve Ratio (CRR) of 100 per cent for the fortnight which began from 26th November 2016.  CRR is the portion of the deposits which banks are required to park to the RBI. Currently it is at 4 per cent.

As per the RBI guidelines, on the increase in NDTL, Net Demand and Time Liabilities between September 16 and November 11, scheduled banks shall maintain an incremental CRR of 100 per cent, effective the fortnight beginning November 26, 2016. As per the estimates, this could be 3.5 lakh crore rupees.

                                                                                                                   Source- The Indian Express

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