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RBI to Release Impounded Funds as I-CRR Requirement Discontinued

The Reserve Bank of India (RBI) has announced the discontinuation of the incremental cash reserve ratio (I-CRR) requirement for scheduled banks, which mandated a 10 percent reserve on the increase in their net demand and time liabilities (NDTL) for a specified period. This measure was originally implemented to absorb surplus liquidity, but it’s now being phased out to ensure system liquidity is not disrupted.

The impounded funds will be released in stages, with 25 percent on September 9, another 25 percent on September 23, and the remaining 50 percent on October 7. This move aims to maintain orderly money markets, as the requirement was initially introduced to manage surplus liquidity generated by factors like the return of Rs 2,000 notes to the banking system.