RBI allows banks to deduct amount equal to credit disbursed to ‘New MSME borrowers’ from their NDTL to calculate CRR

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Circular No. DOR.No.Ret.BC.37/12.01.001/2020-21, Dated 05.02.2021 

The Reserve Bank of India (RBI) has allowed Scheduled Commercial Banks to deduct the amount equivalent to credit disbursed to ‘New MSME borrowers’ from their Net Demand and Time Liabilities (NDTL) to compute the Cash Reserve Ratio (CRR). 

This exemption will be available only up to Rs. 25 lakh per borrower paid up to the fortnight ending October 1, 2021, for a period of one year from the date of origin of the loan or the term of the loan, whichever is earlier. As a result, Banks are required to report the exemption availed at the end of a fortnight.