Banks want funds in dormant accounts taken as CRR

Banks have reached out to the Reserve Bank of India (RBI) with a suggestion to count funds in unclaimed deposits and inoperative or dormant accounts towards the cash reserve ratio, or CRR, people familiar with the matter told ET.

They said about ₹50,000 crore is locked up in such accounts under the central bank’s oversight.

Banks have argued allowing this relaxation will help in augmenting liquidity in the system.

Banks Want Funds in Dormant A_cs Taken as CRR.

A senior bank executive said the lenders had approached the RBI last month.

“We believe that it will help improve the liquidity situation. We are hopeful that the regulator will take a positive view as it is expected to further tighten the policy rates,” he said.

CRR is a specified minimum percentage of the total deposits of customers that commercial banks must hold as reserves either in cash or as deposits with the RBI.

It is a tool the RBI uses to regulate the money supply in the market and currently stands at 4.50%.

The RBI will announce the decision on policy rates on February 8. With inflation cooling down to 5.7% in December, the RBI is expected to take a more accommodative stance.

An ET poll on Monday showed the RBI is likely to lift the repo rate by another 25 basis points to 6.5% from 6.25% at present.

Global central banks such as the US Fed, the European Central Bank and the Bank of England all raised interest rates last month.

“Central banks have started what appears to be a pivot towards lower rate hikes or pauses. At the same time, they continue to emphatically reiterate their resolve to bring inflation down closer to targets. High policy rates for a longer duration appear to be a distinct possibility,” RBI governor Shaktikanta Das said last month.

“Since the RBI, too, is inclined not to stifle growth, allowing such funds to be counted towards the CRR can be the middle ground, mitigating the effect of the interest rate hike,” said another bank executive aware of the developments.

As per the RBI mandate, savings or current accounts that are not operated for 10 years, or term deposits not claimed within 10 years from the date of maturity, are classified as ‘unclaimed deposits’.


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