State Bank of India (SBI) Chairman Pratip Chaudhuri, on Monday, reiterated his stance on Cash Reserve Ratio (CRR) that it should be phased out completely and wanted a debate on the subject.
Mr. Chaudhuri first made this suggestion for CRR phase-out in Kolkata a few days ago. However, the Reserve Bank of India (RBI) Deputy Governor K. C. Chakrabarty, in an interaction with The Hindu recently felt that banks had to work within the rules laid down by the regulator.
“If you are not able to do business in the regulatory system in which you are functioning… you will have to find out something else … where you can do business,’’ he had said.
Demanding a national debate on the subject, Mr. Chaudhuri said that nobody was giving any reason why it could not be abolished. He was talking to journalists at a press conference to announce a two-day annual conference on ‘Global banking: paradigm shift’ being organised by FICCI and Indian Banks’ Association (IBA) on September 4 and 5 here.
Mr. Chaudhuri had reportedly stated in Kolkata that parking the mandatory funds (CRR) with the RBI without any interest on it was a heavy loss for banks. Banks are required to keep 4.75 per cent of their deposits with the RBI as CRR.
Mr. Chaudhuri said that banks needed a level-playing field as insurance companies and non-banking finance companies (NBFCs) were not required to keep such mandatory funds with regulators.