The RBI has amended its regulations to exempt long-term NRE deposits from CRR and SLR requirements for Regional Rural Banks, enabling better liquidity management.
Exemption of Long-Term NRE Deposits
The RBI has issued Third Amendment Directions, providing exemptions for eligible long-term Non-Resident External (NRE) term deposits from the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements for Regional Rural Banks (RRBs). This move intends to enhance liquidity management for these banks.
Details of the Exemption
The exemption applies to fresh NRE deposits with a minimum tenure of three years and aims to encourage the mobilization of such deposits within RRBs. However, it is important to note that transfers from Non-Resident Ordinary (NRO) accounts to NRE accounts are not eligible for the exemption.
This development is expected to improve the financial health of RRBs by allowing for more flexible liquidity management and promoting savings among non-residents.
Bankers and legal practitioners should stay informed about these changes to ensure compliance and optimize deposit strategies under the new regulatory framework.
