Talks with Reserve Bank to reduce cash reserve ratio.

Talks with Reserve Bank to reduce cash reserve ratio.

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Talks with Reserve Bank to reduce cash reserve ratio, Dinesh Kara, Chairman of SBI Bank, said that they are in talks with the Reserve Bank of India to reduce the cash reserve ratio for green deposits.

The cash reserve ratio is the minimum security amount that every bank has to pay with the RBI against its total deposits.

As per the existing norms, the cash reserve ratio for green deposits is 4.50 percent.
This means that one has to pay 4.50 paise to RBI for every one rupee as a bank deposit.

No interest will be paid on this amount.

The Reserve Bank, in June last year, made a new requirement for financial institutions, including banks, to raise green deposits before financing green projects.

Following this, last month SBI introduced green deposit schemes with tenors of 1,111 days, 1,777 days and 2,222 days.

It was announced that the interest rate under this scheme would be 10 basis points lower than the interest rate offered on normal deposits.

Also, through this, it is planned to attract long-term retail deposits to fund green and climate-friendly projects.

In this regard, SBI Chairman Dinesh Kara said:

We are in talks with the RBI to reduce the cash reserve ratio for green deposits.  Also, we are talking about incorporating this into the regulatory policy of RBI.

In this regard, even though the RBI is taking steps, it may take up to two to three years for the change to take place.

He said this.

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