Master Circular - Maintenance of Statutory Reserves Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) - ആർബിഐ - Reserve Bank of India
Master Circular - Maintenance of Statutory Reserves Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)
RBI/2008-09/60 July 01, 2008 Chief Executive Officers of Dear Sir, Master Circular Maintenance of Statutory Reserves Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) The Reserve Bank of India has been periodically issuing instructions to primary (urban) co-operative banks (PCBs) regarding maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) and matters related thereto. In order to enable the banks to have all the instructions at one place, a Master Circular incorporating all the currently operative instructions/guidelines on the subject up to June 30, 2008 has been prepared and is enclosed. Yours faithfully (A.K.Khound) Master Circular
Master CircularCash Reserve Ratio (CRR) & Statutory Liquidity Ratio (SLR) 1.1 All primary (urban) co-operative banks (PCBs) (scheduled as well as non-scheduled) are required to maintain stipulated level of cash reserve ratio (CRR) and statutory liquidity ratio (SLR). 1.2 In regard to cash reserve, the provisions of section 42 (1) of the Reserve Bank of India Act, 1934 (RBI Act, 1934), governs scheduled PCBs whereas, non scheduled PCBs are governed by the provisions of section 18 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) [(BR Act, 1949(AACS)] 1.3 The provisions of section 24 of the Act ibid govern maintenance of SLR for all banks (scheduled as well as non-scheduled). 1.4 The instructions on all these aspects which are operational as on date of this circular are detailed in the following paragraphs. 2.1 The various Forms/Returns are given in the Banking Regulation (Co-operative Societies) Rules, 1966 2.2 In order to monitor the day-to-day position of liquidity of the bank, all PCBs are required to maintain a register, as per format given in Annex 8, showing the daily position of cash reserve and liquid assets maintained under sections 18 and 24 of the B.R.Act, 1949 (AACS). 2.3 The work of maintaining the register on daily basis may be entrusted to a responsible official and it should be put up daily to the chief executive officer, who is responsible for ensuring compliance with the statutory liquidity requirements at the close of business every day. 2.4 To facilitate compilation of figures under various heads of the register, the explanations in respect of each item which form part of the Rules, as footnotes to Form I are given in the Annex 9. However, it may be noted that Scheduled PCBs are required to compute CRR requirements as per Section 42 of Reserve Bank of India Act, 1934. 3. CASH RESERVES for Scheduled PCBs 3.1 Statutory CRR Requirements Earlier, In terms of section 42(1) of the Reserve Bank of India (RBI) Act, 1934, the scheduled PCBs were required to maintain with the RBI during the fortnight, a minimum average daily balance of 3% of their total demand and time liabilities (DTL) in India obtaining on the last Friday of the second preceding fortnight. Further, RBI was empowered to increase, through Gazette notification, the said rate up to 15% of the DTL. The Reserve Bank of India Act, 1934 (RBI Act, 1934) was amended by Parliament in June 2006 and the Reserve Bank of India (Amendment) Bill, 2006 came into force with effect from April 1, 2007. As per the amendment sub-section (1) of Section 42 of the RBI Act, 1934 was amended enabling the Reserve Bank, having regard to the needs of securing monetary stability in the country, to prescribe Cash Reserve Ratio (CRR) for scheduled banks without any floor or ceiling rate. Accordingly, with effect from April 1, 2007, Reserve Bank having regard to the needs of securing the monetary stability in the country, prescribes the CRR for Scheduled Primary Co-operative Banks (PCBs) without any floor or ceiling rate. In terms of section 42(1) A of the RBI Act 1934, the Scheduled PCBs are required to maintain, in addition to the balances prescribed under Section 42(1) of the Act, an additional average daily balance, the amount of which shall not be less than the rate specified by the RBI in the notification published in the Gazette of India from time to time. Such additional balance will be calculated with reference to the excess of the total of demand and time liabilities (DTL) of the bank as shown in the return referred to in Section 42(2) of the Reserve Bank of India Act, 1934 over the total of its DTL at the close of the business on the date specified in the notification. Currently RBI has not prescribed any incremental CRR.3.3 Multiple Prescriptions for CRR For the purpose of maintenance of CRR and SLR the Reserve Bank may specify from time to time with reference to any transaction or class of transactions that such transaction or transactions shall be treated as liability in India of a scheduled PCB.At present with effect from the fortnight beginning from July 19, 2008 the CRR prescribed by the Reserve Bank of India is 8.75 per cent of a bank's total of demand and time liabilities adjusted for the exemptions discussed in the following section 3.11. The schedule of changes brought about in the CRR prescription has been detailed in the table below:
3.5 Maintenance of CRR on a daily basis In order to provide flexibility to banks and enable them to choose an optimum strategy of holding reserves depending upon their intra period cash flow, scheduled PCBs are presently required to maintain on average daily balance, a minimum of 70 per cent of the prescribed CRR balance based on their NDTL, as on the last Friday of the second preceding fortnight. In order to improve the cash management by banks, as a measure of simplification, a lag of two weeks has been introduced in the maintenance of stipulated CRR by the scheduled banks. Thus, with effect from the fortnight beginning from November 6, 1999, the prescribed CRR during a fortnight has to be maintained by every bank based on its NDTL as on the last Friday of the second preceding fortnight i.e. based on the NDTL as on reporting Friday, October 22, 1999 and so on.3.7 Computation of Net Demand & Time Liabilities (NDTL) for CRR (i) Liabilities of a bank may be in the form of demand or time deposits or borrowings or other miscellaneous items of liabilities. As defined under Section 42 of RBI Act, 1934, liabilities of a bank may be towards banking system or towards others. "Demand Liabilities" include all liabilities which are payable on demand. "Time Liabilities" are those which are payable otherwise than on demand. Reserve Bank has been authorised in terms of Section 42 (1) (c) of RBI Act, 1934 to classify any particular liability and hence for any doubt regarding classification of a particular liability, banks are advised to approach Reserve Bank for necessary clarifications. 3.8 Borrowings from Banks abroad Loans/borrowings from abroad by banks in India will be considered as 'liabilities to others' and will be subject to reserve requirements. 3.9 Arrangements with Correspondent Banks for remittance facilities When a bank accepts funds from a client under its remittance facilities scheme, it becomes a liability (liability to others) in its books. The liability of the bank accepting funds will extinguish only when the correspondent bank honours the drafts issued by the accepting bank to its customers. As such, the balance amount in respect of the drafts issued by the accepting bank on its correspondent bank under the remittance facilities scheme and remaining unpaid should be reflected in the accepting bank's books as an outside liability under the head ' Liability to others in India' and the same should also be taken into account for computation of NDTL for CRR/SLR purpose. The amount received by correspondent banks has to be shown as 'Liability to the Banking System' by them and not as 'Liability to others' and this liability could be netted off by the correspondent banks against the inter-bank assets. Likewise sums placed by banks issuing drafts/interest/dividend warrants are to be treated as 'Assets with Banking System' in their books and can be netted off from their inter-bank liabilities. 3.10 Loans out of FCNR (B) Deposits and IBFC Deposits Loans out of Foreign Currency Non–Resident Accounts (Banks), (FCNR [B] Deposits Scheme) and Inter-Bank Foreign Currency (IBFC) Deposits should be included as part of bank credit while reporting in Form ’A’. For the purpose of reporting banks should convert their FCNR (B) Deposits, Overseas foreign currency assets and bank credit in India in foreign currency in 4 major currencies into rupees at FEDAI noon mean rate on the reporting Friday. Scheduled PCBs are exempted from maintaining CRR on the following liabilities (I) The liabilities to the Banking System as computed under clause (d) of explanation to section 42(1) of the RBI Act, 1934 (ii) Credit balances in ACU (US$) accounts (iii) Transactions in Collateralised Borrowing and Lending Operations (CBLO) with Clearing Corporation of India Ltd (CCIL). 3.12 Maintenance of Cash Balances For the purpose of maintaining CRR, every scheduled bank is required to maintain a Principal Account with the Deposit Accounts Department (DAD) of the Reserve Bank of India at the centre where the principal office of the bank is located. 3.13 No Interest on CRR balances maintained with RBI In view of the amendment carried out to RBI Act 1934, omitting sub-section (1B) of section 42, the Reserve Bank of India does not pay any interest on the CRR balances maintained by Scheduled PCBs with effect from the fortnight beginning March 31, 2007. (i) In terms of Section 42(2) of the RBI Act,1934 every scheduled bank is required to send to the Reserve Bank, a return [Form B (Annex 2)] at the close of business on each alternate Friday within seven days after the date of which it relates, duly signed by two responsible officers of bank containing the relevant information. Where such alternate Friday is a public holiday under the Negotiable Instruments Act,1881, for one or more offices of the bank, the return should give the preceding day's figures in respect of such office or offices, but should nevertheless be deemed to relate to that Friday. (ii) Where the last Friday of a month is not an alternate Friday for the purpose of the above return, the banks should send to RBI, a special return in Form B giving the same details as specified above as at the close of business on such last Friday or where such last Friday is a public holiday under the Negotiable Instruments Act,1981, as at the close of business on the preceding working day and such return should also be submitted within seven days after the date to which it relates. (iii) Banks are required to calculate the proportion of their savings bank deposits as at the close of business on 31st March and 30th September, into demand and time liabilities in terms of Regulation 7 of the RBI Act, Scheduled Bank's Regulations, 1951 and report in the prescribed form given in Annexure 2. (iv) Whenever there are wide variations between the sources and uses of funds as being reported in the fortnightly return and the variations exceed 20 per cent, the banks concerned should advise the reasons for such wide variations in the return. (v) In terms of Regulation 5(1)(c) of the Scheduled Banks Regulations, the banks are required to furnish a list of the names, the official designations and specimen signatures of the officers of the bank who are authorized to sign on behalf of the bank returns prescribed under Section 42(2) of the Act, of whom only two may sign such return. The bank has to submit to RBI fresh set of signatures whenever there is change in the incumbency. 3.15 Penalty for Non submission /delayed submission of return Failure to submit the return/late submission of the return attracts the provisions of section 42 (4) of RBI Act, 1934 and the banks are liable for imposition of penalties as indicated therein. (a) From the fortnight beginning June 24, 2006, the penal interest for default in maintenance of CRR is charged as under:(i) In case of default in maintenance of CRR requirement on daily basis, which is presently 70 per cent 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 short fall continues on the next succeeding days, penal interest will be recovered at a rate of five per cent per annum above the bank rate. (ii) In case 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. (b) When under the provisions of Section 42 (3) of the RBI Act, penal interest at the increased rate of 5 per cent above Bank rate has become payable- (i) Every Director, manager or secretary of the scheduled bank who is knowingly and wilfully a party to the default, shall be punishable with fine which may extend to five hundred Rupees and with a further fine which may extend to five hundred Rupees for each subsequent fortnight during which default continues. (ii) The Reserve Bank may prohibit the scheduled bank from receiving any fresh deposit after the said fortnight, and if default is made by the bank in complying with the prohibition referred to in this clause, every director and officer of the bank who is knowingly and wilfully a party to such default or who through negligence or otherwise contributes to such default shall in respect of each such default be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each day after the first, on which a deposit received in contravention of such prohibition is retained by the scheduled bank.4.0 Cash Reserves for Non-Scheduled PCBs. In terms of section 18 of the Banking Regulation Act 1949 AACS), every PCB (not being a scheduled bank) is required to maintain on daily basis a cash reserve, an amount not less that 3 per cent of its DTL as obtaining on the last Friday of the second preceding fortnight and shall submit to the Reserve Bank before fifteenth day of every month a return showing the amount so held on alternate Fridays during a month with particulars of demand and time liabilities in India on such Fridays and if any such Friday is a public holiday under Negotiable Instruments Act 1881, at the close of business on the preceding working day. This balance may be maintained by way of cash resources with itself or by way of balance in a current account with the Reserve Bank or the State Co-operative Bank of the State concerned or by way or net balance in current accounts with the Central Co-operative Bank of the district concerned or in one or more of the aforesaid ways. 4.1 Computation of Net Demand & Time Liabilities for CRR The computation of DTL, liabilities to the banking system, assets with the banking system, and net demand and time liabilities, etc. are explained in detail in Annex 3 (i) Non-scheduled banks are required to submit a Return in Form I, as per proforma given in Annex 4, to the concerned Regional Office not later than 20 days after the end of the month to which it relates showing the position, inter alia, of cash reserve maintained by the banks under section 18 of the B.R. Act, 1949 (AACS) as at the close of business on each alternate Friday during the month, with particulars of its DTL in India on such Fridays or if any such Friday is a public holiday under the Negotiable Instruments Act, 1881, at the close of business on the preceding working day. (ii) Non-scheduled banks are required to furnish in Appendix I, as per proforma given in Annex 5, alongwith the Return in Form I showing the position of the (a) cash reserve required to be maintained under section 18 of the act, ibid. Non-scheduled banks should ensure to maintain the required cash reserve and submit the prescribed return along with Appendix I (Annex V) within the stipulated time to the concerned Regional Offices. Failure to submit the return in time attracts the provisions of section 46(4) of the Act ibid, and the banks are liable to imposition of penalties as indicated therein. The banks should, therefore, in their own interest ensure that the stipulations of the section 18 referred to above are strictly adhered to. 5.0 Statutory Liquidity Reserves (SCHEDULED AND NON-SCHEDULED PCBS) In terms of section 24 (1) and 24 (2A)(a) of the B.R. Act, 1949 (AACS), every bank (scheduled and non-scheduled), is required to maintain, on daily basis, liquid assets, the amount of which shall not be less than 25 per cent or such other percentage not exceeding 40 per cent, as may be notified by RBI, of its demand and time liabilities in India as on the last Friday of the second preceding fortnight. 5.1 Current Prescription for SLR Presently the PCBs are required to maintain a uniform SLR of 25 per cent on their total DTL in India. The compliance with a daily statement to banks/RBI listing the securities lodged/utilized this obligation is monitored ordinarily with reference to the position of the SLR as on the relevant alternate Friday as shown in the return in Form I. Banks are also required to maintain SLR on borrowing through CBLO. However, securities lodged in the Gilt Account of the bank maintained with CCIL under CSGL facilities remaining unencumbered at the end of any day can be reckoned for SLR purposes by the concerned bank. For this purpose, CCIL will provide /remaining unencumbered. The details on computation of SLR are furnished in the Annex 3. 5.3 Manner of Maintaining Statutory Liquidity Reserves The liquid assets may be maintained - (i) in cash or (ii) in gold valued at a price not exceeding the current market price, or (iii) in unencumbered approved securities valued at a price determined in accordance with such one or more of, or combination of the methods of valuation, namely, valuation with reference to cost price, market price, book value or face value, as may be specified by the Reserve Bank of India from time to time. (In terms of circular NO IDMD.3426/11.01.01/(D) 225-06 dated March 03, 2006, all NDS-OM members were allowed to undertake ‘When issued transactions’ on NDS-OM platform. The securities bought in the ‘when issued’ market would be eligible for SLR purposes, only on delivery.) 5.4 The following shall be deemed to be “cash maintained in India”: (i) any excess balance maintained, by a UCB with RBI over and above CRR requirement, and(ii) any cash or balances maintained in India by a co-operative bank, with itself or with the state co-operative bank of the state concerned, or by way of net balance in the current accounts and, also any balances maintained with central co-operative bank of the district concerned, in excess of the cash or balances required to be maintained under section 18 of net balances in current accounts. (iii) Any net balance in the current account.Note : Unencumbered deposits with state/district central co-operative bank of the state/district concerned: (a) Wherever a district is served by more than one central co-operative bank, the area of operations of each central co-operative bank within the district is quite distinct and separate as per the provisions of the by-laws of the concerned central co-operative bank. The primary cooperative banks operating in the area of the concerned central co-operative bank in the district will be normally affiliated to that central co-operative bank. Therefore, the concerned central co-operative bank in the district to which the primary co-operative bank is affiliated, or in whose area the primary co-operative bank has its registered office, will be the central cooperative bank of the district concerned for the purposes of Sections 18 & 24 of the B.R. Act, 1949. (b) Where a primary co-operative bank operates beyond such area, by opening branches in areas served by other central co-operative banks in the district, it can treat its balances with latter also as cash reserve or liquid assets, as the case may be. Legally speaking, the banks may invest in gold (including gold ornaments) to maintain liquid assets. However, such investments are of unproductive nature and yield no income, except price increase, which is subject to speculative forces. Keeping these aspects in view as well as the difficulties involved in valuation, safekeeping, etc., the banks should not invest in gold to maintain liquid assets for SLR purposes.)5.4 Explanations / Requirements regarding Approved Securities (i) In terms of section 5(a) of BR Act, 1949 (AACS) approved securities for the purpose of section 24 of BR Act, 1949 (AACS) means securities in which a trustee may invest money under clause (a), (b), (bb), (c) or (d) of section 20 of the Indian Trusts Act, 1882, and; (ii) Such of the securities authorised by the Central Government under clause (f) of section 20 of the Indian Trust Act, 1882. (Note: all securities under section 20 of the Indian Trusts Act, 1882 cannot be considered as approved securities for the purpose of section 24 of the act ibid. Approved securities should be such trustee securities, which have been specified as eligible securities for the purpose of section 24, ibid by Reserve Bank. In case of any doubt regarding the classification of a security for the purpose of section 24, the banks may seek clarifications from Reserve Bank. ) (iii) Banks may reckon their reserve fund investments in fixed deposits, or the investments in approved securities as SLR assets provided they are unencumbered. (iv) Unencumbered approved securities include such securities lodged with another institution for an advance or any other credit arrangement to the extent to which such securities have not been drawn against or availed of. 5.5 Minimum SLR holding in Government Securities: (i) At present, the primary (urban) co-operative banks are required to invest in government and other approved securities as indicated below:
(ii) All the PCBs are required to maintain investments in government securities only in SGL Accounts with Reserve Bank or in Constituent SGL Accounts of scheduled commercial banks, Primary Dealers (PDs), State Co-op. Banks, and Stock Holding Corporation of India Ltd. or in the dematerialised accounts with depositories such as National Securities Depositories Ltd (NSDL), Central Depository Services Ltd., (CDSL) and National Securities Clearing Corporation Ltd. (NSCCL). (iii) The banks achieving the Rs.25 crore NDTL level or getting scheduled bank status, would be required to achieve the applicable level of investments in Government/other approved securities within a period of three months from the date of the said achievement. (iv) Exemption under Section 24A – upto March 31,2008 -Considering the difficulties faced by the PCBs in making investment in Govt. Securities it was decided that limited exemption from the requirements could be granted to a class of PCBs. Accordingly, vide UBD (PCB) cir. Mo. 31/16.26.00/2005-06 dated February 17,2006 through a Gazette Notification dated December 26,2005, non-scheduled primary (urban) co-operative banks having single branch-cum-head office or having multiple branches within a single district, having a deposit base of Rs. 100 crore or less were exempted from maintaining SLR in prescribed assets up to 15 per cent of their DTL on keeping the required amount, in interest bearing deposits, with State Bank of India and its subsidiary banks and the public sector banks including Industrial Development Bank of India Ltd. For the purpose of eligibility for exemption, deposit base of PCBs is determined on the basis of fortnightly average of DTL in the immediate preceding financial year. The exemption was available from February 17, 2006 in respect of above categories of PCBs and was in force up to March 31,2008. 5.6 Classification and Valuation of Securities for SLR ( i) The Classification and Valuation of Securities for SLR will be done as specified by the Reserve Bank of India from time to time. For detailed instruction on classification and valuation of securities for SLR, please refer to Master circular No UBD.BPD. (PCB). MC. No.12 /16.20.000/2008-09 dated July 01, 2008. (ii) A format for reporting the data is given in Annex 6. Information in the format may be furnished as an Annex, to return in Form I, only to the concerned Regional Office of this department with effect from 2003.The monthly return should contain information of the fortnights following in the respective months. 5.7 Computation of Net Demand & Time Liabilities for SLR (i) The net liabilities to the ‘Banking System’ as computed under clause (d) of explanation to section 18(1) of the B.R.Act, 1949(AACS) are exempted from maintenance of SLR. (ii) The procedure followed for working out net inter-bank liabilities for the purpose of SLR should be in accordance with clause (d) of explanation to section 18(1) of the BR Act, 1949(AACS) The procedure to compute total net demand and time liabilities for the purpose of SLR and minimum SLR of 25% under section 24(1) of BR Act, 1949 must be similar to procedure followed for CRR purposes as detailed in Annex 3. (iii) In terms of clause (d) of explanation to section 18(1) of the BR Act, 1949 (AACS) the amount of net inter-bank liabilities is to be calculated after reducing 'assets with banking system' from 'liabilities to the banking system'. If it is a positive figure, it should be added to 'liabilities to others' to arrive at total net demand and time liabilities. If it is a negative figure, net inter-bank liabilities would be considered as zero and 'liabilities to others' would be considered as total net demand and time liabilities. For the purpose of working out liabilities, subject to a prescribed SLR under the law, if net inter-bank liabilities are positive it should be deducted from total net demand and time liabilities. However, for the purpose of working out minimum SLR of 25% on total net demand and time liabilities net inter-bank liabilities should also be included. (iv) The computation of demand and time liabilities, liabilities to the banking system, assets with the banking system, and net demand and time liabilities, etc. are explained in detail in Annex 3. (ii) In case PCB has availed a loan from DCCB/SCB with which it maintains deposits, for the computation of SLR, the amount of loan availed should be deducted from deposits irrespective of whether a lien has been marked on such deposits or not, as in case of default the lender bank can exercise the lien and the deposits may not be available to meet the liquidity needs. (i) All PCBs (scheduled and non-scheduled), are required to submit a return in Form I ( as detailed in Annex 4) under section 24 of the Banking Regulation Act, 1949 (as applicable to co-operative societies) every month showing the position of liquid assets maintained under the said section as at the close of business on each alternate Friday during the month. [Note: In respect of Non-Scheduled Primary (Urban) Co-operative Banks, Return in Form I is common for reporting cash reserves and statutory liquid assets.] (ii) All PCBs (scheduled and non-scheduled) are required to furnish Appendix II, as per proforma given in Annex 7, alongwith the Return in Form I showing the position of - (a) statutory liquid assets required to be maintained under Section 24 of the Act, (b) liquid assets actually maintained, and(c) the extent of deficit/surplus for each day of the month.(i) In terms of section 24(4)(a) of the BR Act, 1949, if on any alternate Friday or, if such Friday is a public holiday, on the preceding working day, the amount maintained by any bank at the close of business on that day falls below the minimum prescribed by or under clause 24(2A)(a), the bank shall be liable to pay to the RBI in respect of that day’s default, penal interest for that day at the rate of 3 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. (ii) Further, vide section 24(4)(b), if the default occurs again on the next succeeding alternate Friday, or, if such Friday is a public holiday, on the preceding working day, and continues on succeeding alternate Fridays or preceding working days, as the case may be, the rate of penal interest shall be increased to a rate of 5 per cent per annum above the bank rate on each such shortfall in respect of that alternate Friday and each succeeding alternate Friday or preceding working day, if such Friday is a public holiday, on which the default continues. (iii) Without prejudice to the provisions of section 24(4), on the failure of any bank to maintain on any day, the amount so required to be made by or under clause (a) of section 24(2A), the RBI under Section 24(5)(a) may, in respect of such default, require the concerned bank to pay penal interest for that day as provided in section 24(4)(a) and if the default continues on the next succeeding working day, the penal interest may be increased as provided in section 24(4)(b) for the concerned days. (iv) In terms of the provisions of Section 24 (6) (a) the penalty payable under sub Sections (4) and (5) is to be paid by the banks within a period of thirty days from the date on which the notice is issued by the Reserve Bank. (v) Banks should invariably ensure to maintain the required SLR and submit the prescribed return along with Appendix II (Annex 8) within the stipulated time to concerned Regional Offices. Failure to submit the return in time will attract the provisions of section 46(4) of the Act ibid. and the banks will be liable to imposition of penalties as indicated therein. (vi) Where it is observed that banks are persistently defaulting despite instructions and repeated advise, the Reserve Bank in addition to levy of penalty on such defaulting banks, may be constrained to consider cancelling the license in case of licensed banks and refuse license in case of unlicensed banks under section 22 of the Act, ibid. The banks should, therefore, in their own interest ensure maintenance of statutory liquidity ratio at prescribed rates and be very prompt in submission of Return in Form I, Form IX, Form 'B' to RBI offices. (i) Apart from maintenance of CRR and SLR at the prescribed rates, banks are also required to submit relative statutory returns well in time to the concerned Regional Office of RBI. Any violation of these statutory requirements, apart from levy of penal interest would also attract penalties under Section 46(4), read with Section 56 of the B.R. Act 1949. (ii) Whenever any bank fails to maintain the requisite amount of Cash Reserve/Liquid Assets, it should explain the reasons for such default in the letter forwarding the return. Master Circular List of circulars consolidated in the master circular
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