**Summary:**
The Reserve Bank of India (RBI) issued a directive (DOR.No.Ret.BC.37/12.01.001/2020-21) on February 5, 2021, allowing Scheduled Commercial Banks to deduct the amount equivalent to credit disbursed to new Micro, Small & Medium Enterprise (MSME) borrowers from their Net Demand and Time Liabilities (NDTL) for Cash Reserve Ratio (CRR) calculation purposes. A "new MSME borrower" is defined as one who had not availed any credit facilities from the banking system as of January 1, 2021. The exemption is capped at ₹25 lakh per borrower and is applicable for disbursements made up to the fortnight ending October 1, 2021, for a period of one year from the loan origination date or the loan tenure, whichever is earlier. Banks are required to report the exemption availed fortnightly in Annex A to Form A under the Master Circular on CRR and SLR dated July 1, 2015. Proper records, certified by the Chief Financial Officer (CFO) or an equivalent officer, must be maintained for supervisory review. Contact Thomas Mathew, Chief General Manager, Department of Regulation, Central Office, RBI, Mumbai for any questions.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the publisher of the policy document.
Scheduled Commercial Banks: Refers to all banks regulated under the Banking Regulation Act that are included in the Second Schedule to the Reserve Bank of India Act, 1934.
MSME: Micro, Small and Medium Enterprises. These are defined in accordance with the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
Net Demand and Time Liabilities (NDTL): The difference between the sum of demand and time liabilities (deposits) of a bank and its interbank assets.
Cash Reserve Ratio (CRR): The percentage of a bank's total deposits that it is required to maintain with the Reserve Bank of India as cash reserves.
Statutory Liquidity Ratio (SLR): The minimum percentage of deposits that a commercial bank has to maintain in the form of liquid assets like cash, gold and unencumbered approved securities.
Mumbai, Maharashtra: City in India where the Department of Regulation, Central Office of RBI is located.
Thomas Mathew: Chief General Manager at Reserve Bank of India.
भारतीय �रज़व र् बक�
____________________________RESERVE BANK OF INDIA ____________________________
www.rbi.org.in
RBI/2020-21/92
DOR.No.Ret.BC.37/12.01.001/2020-21 February 05, 2021
All Scheduled Commercial Banks
Dear Sir / Madam
Credit to MSME Entrepreneurs
In terms of paragraph 5 of the Statement on Developmental and Regulatory Policies of
February 5, 2021, Scheduled Commercial Banks will be allowed to deduct the amount
equivalent to credit disbursed to ‘New MSME borrowers’ from their Net Demand and
Time Liabilities (NDTL) for calculation of the Cash Reserve Ratio (CRR). For the
purpose of this exemption, ‘New MSME borrowers’ shall be defined as those MSME
borrowers who have not availed any credit facilities from the banking system as on
January 1, 2021. This exemption will be available only up to ₹25 lakh per borrower
disbursed up to the fortnight ending October 1, 2021, for a period of one year from the
date of origination of the loan or the tenure of the loan, whichever is earlier.
2. Banks are required to report the exemption availed at the end of a fortnight, in Annex
A to Form A as per Master Circular on Cash Reserve Ratio (CRR) and Statutory
Liquidity Ratio (SLR) dated July 1, 2015, under the item “Any other liabilities coming
under the purview of zero prescription” at VIII.1. Proper fortnightly records of credit
disbursed to new MSME borrowers/CRR exemption claimed, duly certified by the Chief
Financial Officer (CFO) or an equivalent level officer, must be maintained by banks for
supervisory review.
Yours faithfully
(Thomas Mathew)
Chief General Manager
िविनयमनिवभाग, क��ीयकायालर् य 5व� मिंजल,अमरभवन, सरपीएमरोड, Mumbai 400001
Department of Regulation, Central Office, 5th floor, Amar Building, Sir P.M.Road, Mumbai-400001
,