The Reserve Bank of India (RBI) today announced the restoration of the Cash Reserve Ratio (CRR). In its first monetary policy post Budget, the Central Bank said that the CRR restoration will happen in two phases beginning March 2021.
CRR is the cash reserve ratio (CRR), which is parked with the RBI on a permanent basis and on which banks earn no interest.
To help banks tide over the disruption caused by COVID-19, the cash reserve ratio (CRR) of all banks was reduced by 100 basis points to 3% of net demand and time liabilities (NDTL) effective from the reporting fortnight beginning Mar. 28, 2020.
The dispensation was available for a period of one year ending Mar. 26, 2021. On a review of monetary and liquidity conditions, it has been decided to gradually restore the CRR in two phases in a non-disruptive manner.
Banks would now be required to maintain the CRR at 3.5% of NDTL effective from the reporting fortnight beginning Mar. 27, 2021 and 4% of NDTL effective from fortnight beginning May 22, 2021.
The Central Bank maintained the repo rate at 4% and keeps the stance accommodative. It projected India's GDP growth rate at 10.5% for the fiscal year 2021-22.