An image of RBI headquarters in Mumbai (Photo: Kamlesh Pednekar)
Upset by the Reserve Bank of India’s (RBI) decision to charge the entire deposits that banks collected between September 16 and November 11 as a reserve requirement, bankers have said they would not be able to cut lending rates as much as was expected of them.
In a surprise announcement on Friday, RBI had said an incremental cash reserve ratio (CRR) of 100% would need to be maintained on deposits collected during the period mentioned above. Under normal circumstances, CRR is only four% of deposits. Banks don’t earn any interest on CRR.