SBP reduces Special Cash Reserve Requirement on FE-25 deposits by 5%. In an effort to ensure availability of FCY liquidity in the market, the State Bank of Pakistan (SBP) reduced Special Cash Reserve Requirement (SCRR) by 500bps.
In 2001, SBP allowed banks to freely utilize Foreign Currency Deposits maintained under FE-25 for investment in domestic avenues as well as international avenues. Accordingly, banks / DFIs are required to maintain a certain percentage of their FE-25 FCY deposits as reserves in two types i.e. Cash Reserve Requirement (CRR) and SCRR with SBP on daily basis.
According to a circular issued by SBP, effective from April 20, 2020, all conventional banks and DFIs will be required to maintain 10% of their FE-25 deposits as SCRR against previous requirement of 15%. It is worth noting that the CRR is however unchanged at 5%.
This is a major step towards easing up liquidity in the market. With this action, it is estimated that liquidity of around USD 300 million will be available to banks / DFIs.
You might also be interested in SBP issues Instructions for Quality Data Reporting in ECIB
