The RBI has put a cap on the easy norms on cash reserve requirement (CRR) on consumer lending at a maximum of five years. RBI said that such exemption will begin for the first time in the fortnight ending February 14, which banks can claim from the fortnight beginning January 31, 2020, and up to the fortnight ending July 31, 2020, for a period of five years from the date of origination of the loan or the tenure of the loan, whichever is earlier.
“It will help us reduce our cost on incremental loans. The fourth quarter is generally a good quarter for growth so it will be helpful. This kind of product is a signalling mechanism from the RBI to increase lending,” said Rajkiran Rai, CEO, Union Bank of India.