Banks to get 5-year CRR relief for lending to auto, housing, MSMEs

While home finance can go for a longer period, and vehicle finance loans can reach seven years, analysts say five years is a good enough window for banks

The Reserve Bank of India (RBI) on Monday said 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 31 and July 31.
 
Banks currently maintain 4 per cent on their deposits as CRR.
 
In the monetary policy, however, the RBI said it would allow relaxations on this for loans given to the three productive sectors as they could have “multiplier effects to support growth impulses”.
 
Therefore, banks