State Bank of India, one of India’s most respected banks, came up with a suggestion to scrap the cash reserve requirement held by the Reserve Bank of India.
Chairman of SBI, Mr. Pratip Chaudhuri is said to be the one to propose this suggestion.
Cash reserve is basically the part of deposits that banks keep with the central bank of the country, in our case the RBI, and no interest is paid on it.
“If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place," said RBI deputy governor KC Chakrabarty, as reported by the Press Trust of India.
In response to this, Chaudhari said that the RBI could at least consider paying some interest on the cash reserve as they as banks provide interest to their customers.
For a while now, CRR has been a bone of contention between the RBI and bankers. The RBI, has no plans of getting rid of CRR. Bankers argue that CRR is a non-performing asset and that the sum that they keep with the RBI hinders their functioning in terms of ability to lend huge loans.