Long-term NRE deposits have been exempted from CRR and SLR for Urban Co-operative Banks as per RBI's recent directions, enhancing liquidity.
Update on NRE Deposit Exemptions for Urban Co-operative Banks
The Reserve Bank of India has issued its Third Amendment Directions, providing that long-term Non-Resident External (NRE) term deposits will be exempt from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements for Urban Co-operative Banks. This favorable amendment applies to deposits with a minimum tenure of three years.
Compliance Guidelines
Only deposits held on the bank's books are eligible for this exemption, excluding transfers from NRO accounts to NRE accounts. This regulation aims to enhance liquidity management within Urban Co-operative Banks and promote the retention of foreign deposits.
Legal practitioners should assist Urban Co-operative Banks in understanding these new regulations to ensure compliance and optimize their deposit strategies.
