Croat c.bank tightens rule on mandatory reserves

ZAGREB, Sept 25 (Reuters) - The Croatian central bank said on Thursday commercial banks would no more be able to include kuna cash they keep in bank vaults as a part of their mandatory reserves.

"The (national currency) kuna cash the banks keep in vaults will no longer be included in the calculation of mandatory reserves. The decision takes effect from Oct. 9," the central bank said in a statement.

It also said the banks would now have to increase the mandatory funds deposited at the central bank for some 2.6 billion kuna ($538.2 million).

"This decision is another step in adjusting Croatia's mandatory reserves system with the practice of relevant central banks (in the EU), which in mandatory reserves include only funds deposited at the central bank's account," the central bank said.

Croatia's mandatory reserve requirement rate amounts to 17 percent.

The bank also said the timing of the decision comes from an expected increase of liquidity due to the coming payment for shares of Croat oil concern INA INA.ZA.

Hungary's MOL MOLB.BU public bid for 31 percent of INA expires on Oct. 3. The transaction may be worth up to 8.4 billion kuna.

"We see the need to sterilise any excess liquidity to prevent additional inflationary pressures," the central bank said.

Croatia's year-on-year inflation in August amounted to 7.4 percent. The European Union candidate country, which hopes to join the block around 2011, experiences the highest inflationary pressures in 14 years. (Reporting by Igor Ilic)