The country's largest public sector lender State Bank of India has strongly proposed phasing out of Cash Reserve Ratio (CRR) from the banking system, its chairman Pratip Chaudhuri said on Thursday.
"CRR doesn't help anybody. It is unfairly put on the bank. Why is the CRR not applied to insurance companies, NBFCs (non-banking finance companies) and mutual funds who are also capable of mobilising deposits from the public?" Chaudhuri told reporters on the sidelines of a FICCI programme.
"It doesn't help RBI, doesn't help banks, the industry and the country either. We have recommended every time to the RBI for phasing out of CRR. Most of the banks, even the finance ministry, have made the point to the RBI," he said.
According to Chaudhuri, as the CRR, which is the portion of deposits banks need to keep with the RBI, does not earn any interest, it is leading to cost increase for the industry "without benefiting anybody".
Currently, the CRR is 4.75% of the total bank deposits.