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At present, all banks are to maintain minimum CRR balances up to 95 per cent of
the average daily required reserves for a reporting fortnight on all days of the
fortnight.
Surge in Deposits
The RBI observed that with the demonetization decision, there has been a rush
in deposits relative to the increase in bank credit, leading to large excess
liquidity in the system.
It assessed that the scale of surplus liquidity available with the banking system
is likely to increase further in the fortnights ahead. In view of this, it has been
decided to soak up a part of this surplus liquidity by applying an incremental
CRR as a purely temporary measure.
As the incremental CRR is planned to be a temporary measure, it will be
reviewed on December 9 or even earlier.
Parking of Old Currency Notes:
Also, to decongest storage facility of banks of old Rs 500 and Rs. 1,000 notes, RBI
has allowed lenders to put such currencies at currency chests at the district level
in view of rising deposits due to the demonetization drive.
The central bank said that a currency chest operating at the point to be called
Designated Chest (DC) will be needed to operate a separate vault, to be named
Chest Guarantee Vault (CGV), as an extended wing of it.
RBI said in a notification that Banks, preferably those not having any currency
chest, will deposit such notes in sealed boxes and will get the value of the notes
to the credit of their current a/c with the chest branch. The facility will also be
accessible at post offices if they are maintaining current account with the chest
branch managing CGV.
The notification further stated that the regional office of RBI will arrange
evacuation of notes from the district chest on priority basis.
Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory
Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare
that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI,
Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor
penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his
Relative:
Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the
subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company
Article Written by
Tanaya Nath