RBI eases banks Rs cash balance requirements

The Reserve Bank on Wednesday permitted banks to include now defunct Rs 500 and 1,000 notes as part of their cash balance, a move that may provide relief to banks.In the wake of deposits of Specified Bank Notes (SBNs) in massive quantity, it has been decided that SBNs deposited in the currency chests since November 10 will be considered as part of the chest balance in the soiled note category, RBI said in a notification.

However, such deposits will not be reckoned for calculating chest balance limit or Cash Holding Limit, it said. The notification further said RBI will review the decision in the second half of Feb.According to analysts, the move will help banks adhere to RBI’s sharp hike in CRR announced last week. In a surprise move on Nov 26, RBI raised the cash reserve ratio of ban ks to 100 per cent of total deposits.