Banks get CRR exemption for auto, housing, MSME loans for 5 years.
Room for Lending
The Reserve Bank of India (RBI) today announced that banks would not be required to maintain the cash reserve ratio (CRR) for five years on their deposits for an amount equivalent to loans given to the MSME (micro, small, and medium enterprises), housing and vehicles sectors between January 31st and July 31st.
This is likely to have “multiplier effects to support growth impulses”, the RBI noted in its recent Monetary Policy Committee bi-monthly meet. [BS]
Good to Know
Banks currently maintain 4% on their deposits as CRR.
A Mixed Bag
As per data released by the Centre for Monitoring Indian Economy (CMIE), India had an unemployment rate of 7.16% in January, significantly lower than the 7.6% recorded in December.
Devil is in the Details
Rural unemployment fell to 5.97%, down from 6.93%, in the previous month. However, urban unemployment rose to 9.7% in January, up from 9% in December 2019 - close to its recent peak of 9.71% in August 2019. Meanwhile, the quality of jobs both in urban and rural India has been deteriorating.
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