Question
What minimum percentage of the required CRR, are banks required to maintain on a daily basis?
Read the following passage and answer the next 4 questions (Q14-Q15) Cash Reserve Ratio refers to the fraction of the total Net Demand and Time Liabilities (NDTL) of a Scheduled Commercial Bank held in India, that it has to maintain as cash deposit with the Reserve Bank of India (RBI). The requirement applies uniformly to all banks in the country irrespective of an individual bank’s financial situation or size. Scheduled Commercial Banks (that includes public and private sector banks, foreign banks, regional rural banks and co-operative banks) are required to maintain a cash balance on average with the RBI on a fortnightly basis to cater to the CRR requirement. Non Bank Financial Corporations (NBFCs) are outside the purview of this reserve requirement. Act also authorizes RBI to stipulate an additional or incremental CRR, which, however, has not been put in place by RBI. Banks have to maintain 100% CRR on an average basis during the fortnight. That is, it is not necessary that on all days CRR has to be at 100%.
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