With the Reserve Bank of India (Amendment) Bill, 2006 coming into force, scheduled banks will not be entitled to interest on Cash Reserve Ratio (CRR) balances above the statutory
minimum of 3% and up to the prescribed level of 5%. Consequently, the statutory minimum CRR of 3% has also been abolished. While RBI’s move will hit bank’s interest income, at the same time it will discourage banks to keep excess funds with RBI, thereby, leaving more funds with the banks for lending purpose. RBI has also constituted an internal technical group to review the system & draw out a medium term roadmap for CRR.For complete IIPM article click here
Source:- IIPM Editorial, 2006
Editor:- Prof. Arindam Chaudhuri
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