Malaysia Guidelines on Statutory Reserve Requirement – An Overview and Summary of Requirements

  • By: Staff Editor
  • Date: May 20, 2013
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The Statutory Reserve Requirement (SRR) is a monetary policy instrument available to Bank Negara Malaysia (BNM) for purposes of liquidity management. Banking institutions namely commercial banks, merchant/investment banks and Islamic banks should maintain balances in their Statutory Reserve Accounts (SRA) equivalent to a certain proportion of their eligible liabilities (EL), this proportion is called the SRR rate. The SRR is used to withdraw or inject liquidity when the excess or lack of liquidity in the banking system is perceived by the Bank to be large and long-term in nature. This requirement applies to commercial banks, merchant/investment banks and Islamic banks.
Statutory Reserve Requirement Rate
The SRR rate for banking institutions is 4% of EL.
Maintenance of Balances in Statutory Reserve Accounts
  • Banking institutions should maintain balance equivalent to at least 4% of EL in their SRA at the BNM.
  • Banking institutions should observe the SRR based on the average daily amount of the EL over a fortnightly period (the base period).
  • Maintenance of balances in the SRA is flexible, with a daily variation from the SRR within a band, which currently stands at ±20% of the prevailing SRR rate.
  • Banking institutions are required to comply with the SRR at two levels:
  1. On a fortnightly basis (1st to the 15th and 16th to the last day of a month), the average daily balances maintained in the SRA must be at least equal to the SRR rate.
  2. On a daily basis, balances maintained in the SRA must be within the 20% daily variation band around the prevailing policy rate.
Eligible Liabilities
  • The EL base consists of ringgit denominated deposits and non-deposit liabilities, net of interbank assets and placements with the Bank.
  • Additional adjustments made to the EL base:
  1. Exclusion from EL base:
    • The entire proceeds amount of Tier 1 housing loans/financing sold to Cagamas Berhad.
    • 50% of the proceeds of Tier 2 housing loans/financing sold Cagamas Berhad.
  2. Deduction from EL base
    • Banking institutions can deduct from the EL base holdings of RM marketable securities in their trading book.
    • Principal Dealers (PD) and Islamic Principal Dealers (i-PD) can deduct from their EL base the daily holding of specified RENTAS securities in their trading and banking books.
  • A deduction from the EL base can however only be effected after the banking institution has undertaken the following:
  1. i. Submission of Trading Book Policy Statement (TBPS)
  2. ii. Confirmation by the banking institution that the segregation of RM marketable securities between the banking book and trading book, controls and all other requirements have been put in place.
  • Banking institutions should ensure that the amount of RM marketable securities deducted from EL is reflective of the actual amount as reported in the trading book.


  • Any banking institution which fails to comply with the minimum SRR requirement is liable to pay a penalty.
  • The penalty payable is determined as the sum of the scaled penalty amount and the monetary benefit subject to the maximum penalty (MP)
  • The computation of the maximum penalty is as follows:
    • The scaled penalty amount is calculated as a percentage of the maximum penalty dependent on the number of non-compliances committed by the banking institution, defined as the higher of
  1. the average number of offences in the last three complete calendar years; and
  2. the total number of offences in the current incomplete calendar year:
Number of non-compliances Scaled penalty amount
One 25% of MP
Two 50% of MP
Three 75% of MP
Four or more 100% of MP
  • The monetary benefit arising from the non-compliance is computed as follows:
      Monetary benefit = Shortfall * Average interbank overnight rate or Islamic reference rate
The monetary benefit shall be computed on a daily basis for every day during which the deficiency continues.
Operational Requirements
Banking institutions should refer to circulars and guidelines issued by Jabatan Perkhidmatan Statistik and Jabatan Dasar Sistem Pembayaran on reporting and other operational requirements.

Additional Resources

Read the guidelines in full here.


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