Reportedly the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) has announced that special lending window with Cash Reserve Ratio (CRR) exemption will commence from february 14 and all incremental loans disbursed under the facility will have CRR exemption for the next five years. Meanwhile this means that banks will not be required to maintain 4 per cent of their deposits under the cash reserve ratio for the next five years on incremental loans disbursed towards auto, home, and MSME loans.
Furthermore in a fresh notification, the central bank said the first special lending window for such loans will open on february 14, 2020, for six months ending July 31, 2020. However, it clarified that the net demand and time liabilities (NDTL) will be calculated as of january 31, 2020. Apparently the bank OF INDIA' target='_blank' title='rbi-Latest Updates, Photos, Videos are a click away, CLICK NOW'>rbi had announced the exemption of CRR in its last monetary policy review as it wanted to push banks to lend more to select channels as mentioned earlier.
Moreover at the sixth bi-monthly monetary policy on february 6, the bank OF INDIA' target='_blank' title='rbi-Latest Updates, Photos, Videos are a click away, CLICK NOW'>rbi had said, "Banks can deduct the equivalent amount of incremental credit disbursed by them as retail loans to automobiles, residential housing, and loans to MSMEs (which have GST registration), over and above the outstanding level of credit to these segments as at the end of the fortnight ended january 31, 2020, from their net demand and time liabilities (NDTL) for maintenance of the CRR". Moreover the central bank hopes that the special window will boost lending activities towards needy sectors and reinforce monetary remission.