The
Presidents/Chief Executives
All Banks
MASTER
CIRCULAR – MAINTENANCE
OF STATUTORY CASH RESERVE REQUIREMENT WITH SBP.
In terms of Section
36(1) of State Bank of Pakistan Act, 1956, every scheduled
bank is required to maintain with SBP a balance the amount
of which shall not at the close of business on any day be
less than such percentage of Time & Demand Liabilities
in Pakistan as determined by State Bank from time to time.
Accordingly, in exercise of the powers vested under the aforesaid
provision of law the State Bank has been issuing instructions
from time to time regarding the percentage of Cash Reserve
to be maintained and the manner in which the required cash
reserve balance will be calculated by the banks. In order
to facilitate banks to ensure meticulous compliance with the
Cash Reserve Requirement (CRR), the State Bank is pleased
to consolidate the existing instructions on the subject in
the form of this Master Circular.
2) Presently,
banks are required to maintain with SBP a weekly average balance
of 5% of their total Time & Demand Liabilities subject
to daily minimum of 4%, with effect from 16th December,
2000. In order to comply with the prescribed CRR, the following
guidelines shall be observed:
i)
While 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. Further, total demand and time liabilities
(as calculated in (i) above) will be strictly applied from
the Saturday to next Friday.
iii)
While calculating the CRR, 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
the seven days.
v)
If any bank maintains the average weekly balance of
5% but fails to maintain a daily minimum balance of 4% of
the 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 CRR
is (a) Rs.69/- per 100,000/- or part thereof per day on the
amount by which the balance with SBP falls short of the required
balance; (b) if the shortfall continues in the subsequent
week or thereafter, the penalty shall be increased to Rs.86/-
per 100,000/- or part thereof per day.
3.
This will supersede all previous instructions on the
subject.
Please acknowledge receipt.
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