RBI rectifies reporting errors in banks' CRR maintenance data
fortnightly cash balances of banks kept with the Reserve Bank of India (RBI) unusually fell short of the mandated cash reserve requirement, the central bank has rectified the matter by resolving issues with how the data was reported.
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«There were some issues with the way the data was being reported by banks and published in the RBI's daily releases. The RBI was aware of the matter and has taken steps to resolve the erroneous presentation of the data,» a source aware of the developments said.
According to Section 42 (1) of the Reserve Bank of India Act, 1934, the RBI prescribes the Cash Reserve Ratio (CRR) for scheduled commercial banks. The CRR, which is one of the RBI's strictest regulatory requirements for banks, is currently at 4.50% of net demand and time liabilities — a proxy for deposits.
This means banks must set aside that portion with the RBI as a prudential measure. The CRR can also be used to influence monetary policy by the RBI, as changes in the reserve requirement have a major impact on banking system liquidity.
An email sent to the RBI seeking comment on the matter did not receive a response by the time of publication. ET had reported on April 29, citing daily data published by the RBI, that average fortnightly cash balances of banks kept with the central bank had fallen short of the requirement several times over the past year.
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