competition success review annual subscription
competition success review annual subscription Published this article page no 87 CRR LEEWAY FOR NEW RETAIL AND MSME LOANS Why in News? Reserve Bank of India (RBI) asked banks to avail cash reserve ratio (CRR) exemption on incremental retail loans given to MSME housing and auto sectors between January 31 and July 31 2020 for a period of five years. RBI also decided to link pricing of loans by scheduled commercial banks for the medium enterprises to an external benchmark effective April 1 2020. More on news Banks can deduct the equivalent amount of incremental credit disbursed by them as retail loans to these sectors over and above the outstanding level of credit to these segments as on January 31 2020 from their net demand and time liabilities (NDTL) for maintenance of the CRR. Maintenance vs. Nonmaintenance of CRR All Scheduled Commercial Banks are at present required to maintain with RBI a Cash Reserve Ratio (CRR) of 4% of the Net Demand and Time Liabilities (NDTL) (excluding liabilities subject to zero CRR prescriptions) under Reserve Bank of India Act 1934. Nonmaintenance of CRR on new loans for specified condition implies that Banks can claim deduction equivalent to these loans from their Net Demand and Time Liabilities (NDTL). Cash Reserve Ratio (CRR) It is a specified minimum fraction of the NDTL which commercial banks have to hold as reserves either in cash or as deposits with the central bank. This money is parked with the Central Bank without any interest. Net Demand and Time Liabilities (NDTL) It shows the difference between the sum of demand and time liabilities (deposits) of a bank with the public or the other banks and the deposits in the form of assets held by the other bank. o Banks NDTL = Demand and time liabilities (deposits) – deposits with other banks competition success review annual subscription buy.
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