The Presidents / Chief Executives,
All Banks

Dear Sirs/Madam,

MAINTENANCE OF CASH RESERVE REQUIREMENT (CRR)

Please refer to the BSD Circular No.09 dated July 18, 2006, Circular No.10 dated July 22, 2006 and Circular No.01 dated January 18, 2007 regarding “Maintenance of Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR)”.

2) In exercise of the powers conferred upon the State Bank of Pakistan under Section 36 of the State Bank of Pakistan Act, 1956, it has been decided to revise the Cash Reserve Requirement (CRR) and the definition of Time and Demand Liabilities with effect from 4th August, 2007 as under :-

a) Definition of Time and Demand Liabilities as mentioned in Annexure-A of the BSD Circular No. 9 dated July 18, 2006, has been revised. As per the new definition, Time Liabilities will include Time Deposits with tenor of 1 year and above. Accordingly, Time Deposits with tenor of less than 1 year will become part of Demand Liabilities.

b) Cash Reserve Requirement (CRR) has been revised as follows:

i) Weekly average of 7% (subject to daily minimum of 6%) of total Demand Liabilities (including Time Deposits with tenor of less than 1 year); and

ii) Time Liabilities (including Time Deposits with tenor of 1 year and above) will not require any CRR.

3) All other instructions contained in the above-referred circulars shall, however, remain unchanged.

Please acknowledge receipt.