{"id":28891,"date":"2020-02-13T18:00:30","date_gmt":"2020-02-13T12:30:30","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=28891"},"modified":"2020-02-17T17:12:27","modified_gmt":"2020-02-17T11:42:27","slug":"rbi-allows-cash-reserve-ratio-exemption-for-new-retail-msme-loans","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/rbi-allows-cash-reserve-ratio-exemption-for-new-retail-msme-loans\/","title":{"rendered":"RBI Allows Cash Reserve Ratio Exemption for New Retail, MSME Loans: Read Full Story"},"content":{"rendered":"<p class=\"has-drop-cap\">RBI in its continuous effort of revitalizing the flow of bank credit and boosting demand, granted Banks, Cash Reserve Ratio (CRR) exemption for five years for incremental credit disbursed to automobiles, residential housing, and micro small and medium enterprises (MSMEs) between 31 Jan-31 July 2020. This means that Banks will not have to make additional Cash Reserve Ratio (CRR) against any incremental loans disbursed to the targeted segments. As per <a href=\"https:\/\/www.rbi.org.in\/Scripts\/NotificationUser.aspx\">RBI&rsquo;s press release<\/a>, the special lending window with CRR exemption will be open from February 14.<\/p>\n\n\n\n<p>The special lending\nwindow allowed by RBI is expected to improve credit flow to needy sectors,\nstrengthen regulation and supervision, broaden and deepen financial markets,\nand at the same time improve payment and settlement systems.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the Cash Reserve Ratio (CRR)?<\/h2>\n\n\n\n<p>Cash Reserve Ratio\n(CRR) is a certain minimum amount of deposit that commercial banks have to hold\nas reserves with RBI. CRR is set according to the guidelines of the central\nbank of the country.<\/p>\n\n\n\n<p>At present, CRR is 4% of net demand and time liabilities. Banks don&rsquo;t earn any interest in maintaining CRR with the RBI.<\/p>\n\n\n\n<p>With an aim to improve\nthe credit flow to needy sectors RBI said Banks flushed with liquidity could\nlend to the needy segments without the requirement of parking additional CRR,\nwhich is money parked with the RBI without interest. The productive sectors\nidentified by RBI are auto and residential housing loans and loans offered to\nmicro, small and medium enterprises (MSMEs).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">RBIs Press Release<\/h2>\n\n\n\n<p> &ldquo;An amount equal to the incremental credit outstanding from the fortnight beginning January 31, 2020, and up to the fortnight ending July 31, 2020, will be entitled for deduction from Net Demand and Time Liabilities (NDTL) for the purpose of computing the CRR for a period of five years from the date of origination of the loan or the tenure of the loan, whichever is earlier,&rdquo; the RBI said.<\/p>\n\n\n\n<p>The circular issued by\nRBI asks banks to report the Cash Reserve Ratio (CRR) exemption availed at the\nend of a fortnight under &ldquo;exemptions\/others&rdquo; in the Section 42\nreturn, under the provisions of the master circular on CRR and SLR issued on\nJuly 1, 2015.<\/p>\n\n\n\n<p>Proper fortnightly\nrecords of net incremental credit extended to these select sectors\/NDTL\nexemptions claimed, duly certified by the chief financial officer or an\nequivalent officer must be maintained by banks for supervisory review, the\ncircular said.<\/p>\n\n\n\n<p>At present, CRR is 4% of net demand and time liabilities. Banks don&rsquo;t earn any interest in maintaining CRR with the RBI.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Take Away<\/h3>\n\n\n\n<p>RBI&rsquo;s decision of\nexempting Banks from maintaining Cash Reserve Ratio (CRR) for five years for\nretail and MSME loans is expected to make loans cheaper to these particular\nsegments. This move from RBI shall boost the lending capability of scheduled\nbanks and revitalize the flow of bank credit to productive sectors.<\/p>\n\n\n\n<div class=\"read\"><p><b>Read, Also:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/nbfc-license-is-the-new-goal-of-fintech-startups\/\" target=\"_blank\" rel=\"noopener noreferrer\"><a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;NBFC&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Non-Banking Financial Companies (NBFC) operate similarly to banks but do not possess the legal status of a bank. Registered under the Companies Act 2013 and governed by the RBI Act&amp;#039;s section(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/nbfc\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>NBFC<\/a> License Is the New Goal of Fintech Startups\n<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>RBI in its continuous effort of revitalizing the flow of bank credit and boosting demand, granted Banks, Cash Reserve Ratio (CRR) exemption for five years for incremental credit disbursed to automobiles, residential housing, and micro small and medium enterprises (MSMEs) between 31 Jan-31 July 2020. This means that Banks will not have to make additional [&hellip;]<\/p>\n","protected":false},"author":26,"featured_media":28892,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2620],"tags":[],"acf":{"service_id":"0"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>RBI Allows Cash Reserve Ratio Exemption for New Retail, MSME Loans<\/title>\n<meta name=\"description\" content=\"RBI Allows (CRR) Cash Reserve Ratio Exemption for five years for incremental credit disbursed to automobiles, residential housing, and MSMEs.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/rbi-allows-cash-reserve-ratio-exemption-for-new-retail-msme-loans\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"RBI Allows Cash Reserve Ratio Exemption for New Retail, MSME Loans\" \/>\n<meta property=\"og:description\" content=\"RBI Allows (CRR) Cash Reserve Ratio Exemption for five years for incremental credit disbursed to automobiles, residential housing, and MSMEs.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/rbi-allows-cash-reserve-ratio-exemption-for-new-retail-msme-loans\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-02-13T12:30:30+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-02-17T11:42:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/02\/RBI-Allows-CRR-Exemptions-for-Retail-MSME-Loans.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Shubham Chauhan","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/10\/IMG_20191011_160437__01.jpg","authorDescription":"A passionate legal content writer, a nature enthusiast, an avid reader, and a part-time thinker. By means of conducting in-depth research on industry related topics, Shubham often builds flawless and intelligible legal content for populace from all walks of life.","postViews":414,"readingTime":2,"nextPost":{"id":28901,"slug":"problems-of-fake-gst-invoice-and-measures-to-address-them"},"prevPost":{"id":28876,"slug":"form-aoc-4-cfs-companies-accounts-amendment-rules-2020"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/02\/RBI-Allows-CRR-Exemptions-for-Retail-MSME-Loans.jpg","postTerms":"RBI Notification","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/28891"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=28891"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/28891\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/28892"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=28891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=28891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=28891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}