MUMBAI: Pushing hard on his demand to abolish the mandatory cash reserve ratio (CRR), State Bank of India Chairman Pratip Chaudhuri said that focusing merely a few existing rules do not justify the practice of CRR.
“I feel that though people have said that it cannot be done, there have not been enough grounds to say why,” he said.
Responding on a query that whether banks should lobby with the government to get the CRR abolished, Chaudhuri said, “Just to argue that this is the rule and this is the law... I do not think it is the best way to justify a particular set of (rules).”
With the abolishment of CRR, which is presently estimated at 4.75 per cent and on which banks earn no interest, the banking system can get around Rs 2.6 trillion which could extended as loans.
Criticising sharply the suggestion, RBI Deputy Governor KC Chakrabarty said that Chaudhuri's demand was untenable as it went against the rules.
If the SBI chairman is not able to do business as per our regulatory environment, he has to find some other place,” Chakrabarty had said last week.
Meanwhile, the SBI chief appreciated the role played by the Central bank and other financial sector regulators in being extra patient in monitoring the activities of large companies.