 |
| - A.Chandramouliswaran |
I have great respect for Shri Seshan for his knowledge,meticulous research, for updating himself practically on a daily basis with the latest data regarding the economy in general and banking system in particular, extensive study even at this advanced age and finally for his enormous energy in spending several hours daily on reading, writing not only on banking subjects but also on music, tennis etc.Hence, it is with utmost humility that I wish to raise an issue with him. CRR was 6% till some time ago. With the amendment of the RBI Act, CRR could be even 10% or more. Would the RBI be justified in not paying any interest on CRR,i.e even if the cash balance is required to be maintained in excess of the statutory minimum of 3%, say,at 10%? Banks have a certain cost of funds and would be handicapped in keeping the cost of their lending operations competitive if they do not earn any interest on a substantial portion of their funds. This issue has assumed more relevance in recent times with even Public Sector banks being recognised as commercial entities( notwithstanding its social obligations in line with the directives of the Government/RBI) and expected to make profits for its shareholders who to a significant extent are now private shareholders.
No comments:
Post a Comment