Question

Under Section 42 of the Reserve Bank of India Act, 1934, what is the penalty imposed on a scheduled bank for shortfall in maintaining the Cash Reserve Ratio (CR

Q: Answer-Under Section 42 of the Reserve Bank of India Act, 1934, what is the penalty imposed on a scheduled...

Section 42 of the RBI Act, 1934 mandates that every scheduled bank maintain a Cash Reserve Ratio CRR with the RBI. Where a bank fails to maintain the required CRR, it is liable to pay the RBI a penal interest at the rate of 3 per annum above the Bank Rate on the amount of shortfall for the first day, and at 5 per annum above the Bank Rate for each subsequent day during which the default continues.