KARACHI - The State Bank of Pakistan Saturday slashed further the cash reserve requirement (CRR) by one percent with immediate effect and it was done 15 days in advance as against the earlier announced date of November 15. The commercial banks asked the SBP not to wait till November 15 and make the decision now, which will further infuse Rs30 billion liquidity into the banking system. The move is part of the SBP's banking bailout plan of releasing Rs270 billion announced last month. Time liabilities (including time deposits with tenor of 1 year and above) will not require any cash reserve. It is important to mention here that SBP decision of reducing 100 points cut in CRR had to be effective from November 15 as the central bank announced this earlier. The banking system has obtained another Rs 30 billion, making a total of Rs 210 billion in the backdrop of 100bps slash in CRR which brought it down to five percent from six percent of the previous requirement. As per the SBP estimation, the reductions in CRR and exemption of time liabilities from SLR had released an aggregate liquidity of over Rs 180 billion into the system and contributed significantly in alleviating the liquidity strain in the market. Cumulatively SBP from October 18 to November 1 had released liquidity of Rs 210 billion. It must be noted that since October 8, 2008, the SBP had revised the cash reserve requirements by 400 bps to five percent for all deposits up to one year maturity which aimed at satisfying banks' withdrawal demands. The cut in CRR rate by 200bps to six percent had been effective from October 18, 2008. As a result of this decrease of 200bps, an additional liquidity of about Rs 60 billion released into the system. The reserve requirement is a bank regulation that set the minimum reserves each bank must hold to customer deposits and notes. It may be recalled that SBP had taken few other measures to improve liquidity position of the financial system. These measures included the injection of fresh liquidity into the system through open market operations, reduction in cash reserve requirement by 1 percent, allowing of HTM securities for discounting purposes, and an increase in SLR eligibility limit of the PIBs from existing five percent to 10 percent of the term deposit limit.