In simple words it refers to amount kept in Bank Branch on an overnight for the purpose of next day cash transactions.
This Cash limit is decided by the Controlling Office on the basis of
- Size of the Branch.
- Average daily Cash Receipts.
- Average daily Cash Payments.
- Location of the Branch.
- Branch Business.
On these above factors CRL will be decided. Branch Manager should recommend for CRL to its controlling office. In turn controlling office give approval for CRL.
BENEFITS
The following are the benefits of the CRL
- It is mainly set to ensure smooth flow of all business operations.
- Reduce the branch level risk.
- CRL helps to increase the profitability of the bank.
FORMULA
If Controlling Office decide to give Cash Retention Limit 0.25% of Total Deposit of the Bank.
Example
Branch having 100 Crore deposit Cash Retention Limit will 25 Lakhs or as decided by the Bank Branch/Controlling offices.
Approval/Sanction of Cash Retention Limit fixed by controlling office sanction copy should be kept in bank branch file for audit/inspection purposes.
CONCLUSION ON CASH RETENTION LIMIT
This article helps to understand Cash Retention Limit, CRL meaning, CRL benefits etc.
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FAQs
Q: Cash retention limit of branches are fixed by?
Controlling Office or Regional Office.
Q: How is cash retention limit calculated?
Its calculated on the basis of Bank Branch Deposit.
