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Mumbai April 14 RBI will not pay interest rate on CRR balances of banks, effective March 31, 2007.

On March 30, RBI had said in a press release that the interest rate applicable on eligible CRR balances (i.e., the amount of reserves between the 3 per cent statutory minimum CRR and that prescribed by the RBI) shall be reduced to 0.5 per cent per annum from the present 1 per cent per annum, effective the fortnight beginning April 14, 2007.

With this move, banks will not earn any income on the deposits impounded by the RBI under the Cash Reserve Ratio (CRR). Also, the 3 per cent minimum CRR has been scrapped.

In a press release the RBI has said that consistent with the Reserve Bank of India (Amendment Act), 2006, no interest will be payable on CRR balances of banks with effect from the fortnight beginning March 31, 2007.

RBI had hiked CRR in two phases on March 30 to 6.5 per cent, with the first tranche (6.25 per cent) of the hike starting Saturday.

More Stories on : CRR & Bank Rates | Interest Rates | RBI & Other Central Banks

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