The RBI has exempted eligible long-term NRE deposits from CRR and SLR for Rural Co-operative Banks, aiding liquidity management.
Exemption for Rural Co-operative Banks on NRE Deposits
The Reserve Bank of India has amended its regulations to exempt fresh long-term Non-Resident External (NRE) term deposits mobilized by Rural Co-operative Banks from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements. This exemption applies to deposits with a minimum tenure of three years.
Eligibility and Exemption Details
The exemption facilitates better liquidity management for these banks while encouraging the mobilization of deposits from the non-resident segment. It ensures that only original deposits held on the bank's books qualify for this exemption, thus promoting stability.
These amendments are likely to enhance the functioning of Rural Co-operative Banks, allowing them to better meet the credit needs of their borrowers.
Practitioners focusing on rural finance should closely monitor these developments to assist their clients in navigating compliance and utilizing this exemption effectively.
