Q. There has been an ongoing debate on abolition of cash reserve ratio (CRR). What is your reading about it?
A. CRR has its own philosophy to which it was set up. RBI has its own reason to keep it. From bankers’ perspective, we raise money and expect return on that. CRR money goes away without any interest. For banks, it is definitely a drain on profits. It is definitely a burden on banks. If depositors’ security is a concern, then the regulator should pay some interest on CRR. RBI normally does not pay interest on CRR. Some 20 years back, it used to pay interest but beyond 3% when CRR had gone up as much as 15-16%. With changing pace of time, discussion on this issue should take place. You cannot continue to do banking as you used to do in the past.
No comments:
Post a Comment