Treat gold deposits as part of CRR/SLR: SBI chairman

With gold imports having pressured the current account gap in the recent past, there is a greater need to make use of gold available in the country and make it more liquid, she said

Two large Indian public sector banks have made a pitch for treating a portion of their gold deposits as part of the mandatory cash reserve ratio (CRR) or statutory liquidity ratio (SLR).

“Is it possible that the regulator can treat a little bit of our gold deposits as CRR or SLR? After all, gold is also a store of value,” State Bank of India Chairperson Arundhati Bhattacharya said at the Gem & Jewellery Export Promotion Council banking summit here.

CRR, at four per cent now, is the portion of deposits parked by banks with the Reserve Bank of India (RBI) that earns no interest, while SLR, at 22.5 per cent, is the amount of deposits to be mandatorily invested in recognised securities such as government bonds and other liquid assets.

Now, there is a greater need to make use of gold available in the country and make it more liquid, she said.

Endorsing Bhattacharya view, Bank of Baroda Chairman and Managing Director S S Mundra said it “makes sense” to treat a part of banks’ gold deposits as CRR and SLR. “When banks are holding gold, it is of value. I think it makes sense to bring under CRR/SLR.”

“It also fits the larger pattern that ultimately we are talking about unearthing the gold and bringing it to productive sectors in the economy as a whole. The gold that is readily available can be brought under recognition,” Mundra said.

SBI is the largest player in the gold deposit scheme segment and is struggling to deploy the entire deposits in productive assets. “We also find that we are not able to deploy the entire gold that we get. There is really no incentive for us to go ahead and get more of these deposits now so as to make gold more liquid,” the SBI chief said.