“There has been an amendment in the (RBI) Act. RBI has taken a decision that there will be no interest paid on CRR balances. There is no plan to revisit that decision,” Finance Minister P Chidambaram told reporters after a meeting with Chairmen of PSU banks here.
Last year, an amendment was carried out in RBI Act, 1934, doing away with payment of any interest on the CRR balances maintained by scheduled commercial banks. Earlier, RBI used to pay nominal 3.5 per cent interest on cash balances above three per cent and up to five per cent of CRR.
Marginal impact
Further, Mr Chidambaram said the impact of CRR hike coupled with RBI’s move to withdraw cap of Rs 3,000 crore on daily reverse repo transaction (RBI’s measure to suck out liquidity from banks by selling government bonds) would have marginal impact on net interest margins of banks.
If removal of cap sucks out Rs 15,000 crore from banking system, the impact of twin measures of RBI would be 0.03 per cent on the banks’ net interest margins, he observed. “ think banks’ balance sheets are healthy and my view is it is possible for banks to take a small hit on the balance sheets,” he averred.  He also said that  there will be no impact on credit availability for productive sectors of the economy.