The mechanism also penalizes the banks for any shortfall in meeting the target. Further, the banks shall continue to maintain daily minimum CRR, which is currently at 3pc. As the SBP explained in its notice, banks do not earn any return on the amount of CRR maintained. “Therefore, a decrease in the amount of CRR works as an incentive for banks, whereas an increase in amount of CRR serves as a penalty for banks,” the SBP said. Accordingly, quarterly targets from December 31, 2020 till December 31, 2021 have been agreed with the banks.

Source: Pakistan Today October 07, 2020 17:42 UTC