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Current Affairs

RBI Issued Norms for CRR

Current context: The Reserve Bank of India (RBI) has issued clarifications on relaxation on cash reserve ratio (CRR) calculations on 26th February 2020.
RBI Issued Norms for CRR 
  • The clarification is given on CRR calculations for incremental credit extended for automobiles, residential housing and micro, small and medium enterprises (MSMEs).
  • RBI clarified that the incremental credit eligible for CRR exemption, which can be set off against the net demand and time liabilities (NDTL) for calculating CRR has to be net of repayments.
  • RBI said that to calculate the incremental credit, the outstanding retail loans to the specified segments as on every reporting Friday beginning 14th February up to that of 31st July 2020, will be deducted from the outstanding credit to the specified segments as on 31st January, 2020.
  • If the difference between the outstanding credit is positive, the equivalent amount of difference should be deducted from Net Demand and Time Liabilities (NDTL) for the purpose of CRR maintenance.
  • If the difference in credit to any of the specified segment is negative, it should be ignored.
  • The norm also includes that the non-performing assets (NPA) and repayments would be deducted from the incremental credit.
  • The net amount of incremental credit will be eligible for the benefit of deduction from NDTL for a maximum period of five years (i.e. fortnight of 24th January 2025), or the tenure of the loan, whichever is earlier.

Question: 

Q.1 As per the new RBI norm for cash reserve ratio (CRR) calculations, the net amount of incremental credit will be eligible for the benefit of deduction from NDTL for a maximum period of ________________ years? 
a. Two
b. Three
c. Five
d. Seven
RBI Issued Norms for CRR RBI Issued Norms for CRR Reviewed by Neha Verma on February 27, 2020 Rating: 5

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