RBI to pay interest on Cash Reserve Ratio

Mumbai, Feb 25: The Reserve Bank of India (RBI) has accepted the demand of banks to pay interest on the Cash Reserve Ratio (CRR).

The RBI will pay interest on the CRR in excess of 3 per cent, an official release here said. It will pay 1 per cent interest with retrospective effect from February 17, while 2 per cent interest will be paid on CRR maintained during December 9, 2006 to February 16, 2007. For the CRR maintained between June 24, 2006 and December 8, 2006, the interest to be paid will be at 3.5 per cent, the release said.

The RBI will also not penalise banks that had failed to maintain the minimum CRR balance of 3 per cent during June 22 to December 8, 2006, the statement added.

The RBI had stopped paying interest on excess CRR balance from June last year following the amendment of the RBI Act.

UNI