It appears the end is not in sight regarding the CRR debacle according to a recently released report by CSL Stockbrokers. The guys are now predicting that CRR may increase to 100%.
“We expected this to occur at some point in 2014 – and still see a move to 100 per cent this year. Raising the CRR reduces the appeal of public sector deposits to commercial banks, which can now deploy only a quarter of that money, before paying the administrative costs associated with managing it.
“If the CRR on public sector funds rises to 100 per cent this year, in line with our expectations, then the incentive for banks to take public sector deposits will be eliminated.”
Now, if this were to be the case then expect banks to avoid holding public sector deposits entirely. If they continue to hold public sector deposits without being able to deploy it into commercial use they still won’t avoid the penalty imposed by AMCON on total deposit liabilities. This indeed are interesting times. Follow the link below for the full story.