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In terms of Section 36(1) of the State Bank of Pakistan Act,1956,
every scheduled bank is currently required to maintain with
the State Bank an average balance of 5% of its total time and
demand liabilities in Pakistan worked out on weekly basis provided
that the amount of the balance shall not at the close of business
on any day be less than 4% of the total time and demand liabilities
in Pakistan.
2. The State Bank has been receiving
queries from banks regarding compliance with the said Cash
Reserve Requirement. Accordingly, following clarifications
are issued for the convenience of the banks.
i) For the purpose of calculating the
average weekly balance of 5% and the daily minimum balance
of 4%, the demand and time liabilities at the close of business
on every Saturday (and if Saturday is a holiday, on the previous
working day) shall continue to be taken into account.
ii) For the purpose of calculating
the average weekly balance the week shall invariably consist
of seven (7) days from Saturday to Friday irrespective of
the holiday(s). In case any of the days from Saturday to Friday
happens to be a holiday the balance maintained at the close
of preceding working day shall continue to be taken into account
for the purpose of calculating the average weekly balance.
iii) For the purpose of compliance
with the Cash Reserve Requirement the balances maintained
as per books of State Bank of Pakistan shall be taken into
account.
iv) For levy of penalty on default
in maintaining average weekly balance of 5% the minimum balance
required to be maintained during a week shall be determined
by multiplying 5% of the time and demand liabilities (as calculated
in (i) above) with total week days i.e. 7 and compared with
the aggregate of the balances maintained during the week with
SBP. If the aggregate balance maintained during a week is
below the minimum balance required to be maintained the bank
shall render itself liable to pay the penalty. The penalty
shall be levied on the shortfall between the aggregate balance
maintained during a week and the aggregate minimum balance
required to be maintained over seven days.
v) If any bank maintains the average
weekly balance of 5% but fails to maintain a daily minimum
balance of 4% of its total time and demand liabilities at
the close of business on any day, such bank shall also render
itself liable to pay the penalty.
vi) The rate of penalty for default
in maintenance of Statutory Cash Reserve shall continue to
be the same as stipulated in BPRD Circular No.21 dated 9th
June,1999.
3. This supercedes all previous instructions
on the subject.
Please acknowledge receipt.
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