State Bank of India (SBI) Chairman Dinesh Khara revealed on Friday that the nation’s largest lender is in discussions with the Reserve Bank to lower the cash reserve ratio (CRR) requirement on green deposits.
SBI introduced a green deposit scheme last month, a pioneering initiative in domestic banking aimed at attracting long-term retail deposits dedicated solely to funding green transition projects or climate-friendly endeavors. These deposits will be priced 10 basis points lower than normal deposit rates.
CRR, currently set at 4.5 percent, represents the minimum cash reserve that banks must maintain with the central bank against their total deposits. While this regulation acts as a solvency measure, banks do not earn any interest on the amount reserved with the RBI.
“We are engaging with the regulator for a reduction in the CRR for green deposits and secondly, if at all as a policy, it can be incorporated into the regulator policy mechanism. Early beginning has happened from the regulator’s side also but maybe it will take two to three years to start having an impact on the pricing too,” Khara stated at an event organized by the Indian Institute of Management Kozhikode.
