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030508
STATE BANK OF PAKISTAN BANKING SUPERVISION DEPARTMENT
BSD Circular No.06
May 08, 2003
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.
Yours faithfully,
(JAMEEL AHMAD)
Director