(Ref: Circular DOR.No.Ret.BC.30/12.01.001/2019-20 dt. February 10, 2020)

Pursuant to the announcement made in the Statement on Developmental and Regulatory Policies of February 6, 2020, the Reserve Bank issued a circular on February 10, 2020 advising banks that an amount equivalent to incremental credit outstanding from the fortnight beginning January 31, 2020 and up to the fortnight ending July 31, 2020 will be eligible for deduction from NDTL for the purpose of computing CRR for a period of five years from the date of origination of the loan or the tenure of the loan, whichever is earlier. Some banks have sought clarifications with regard to issues like computation of incremental credit and segments eligible for exemption, among others. At the outset, it is clarified that the exemption is available on equivalent incremental credit to three segments (retail loans to automobiles, residential housing and loans to MSMEs) which is based on the difference between outstanding credit to these segments as on January 31, 2020 and subsequent fortnights up to July 31, 2020. Key queries raised and our responses thereto are set out below: