We are now exploring the possibility of requiring a higher Cash Reserve Ratio from Special Fund deposits in excess of transaction balances. 25. Dynamic provisioning – Too late in the game. At the core of the Bank’s problem lies a weak balance sheet.
The combination of Operation Reserves Reconstitution (ORR), embarked upon hesitantly – and, that too, only after securing a now-problematic agreement to co-share the attendant costs with the Treasury −, open market operations at rising volumes, and low yields on reserve assets, allied with a “negative carry”, has proved lethal for the Bank’s finances.