MUMBAI, Feb 16 Reuters The State Bank of India has asked the Reserve Bank of India for a reduction in the cash reserve ratio that needs to be maintained on green deposits raised by banks, Chairman Dinesh Kumar Khara said on Friday.

Currently, banks have to maintain a CRR of 4.5 on their total deposits, with no distinction provided for green deposits.

We have put across the asks. One, of course, is a reduction in CRR for green deposits and second, if at all as a policy it can be incorporated, Khara said.

The regulator has taken initial steps towards encouraging green deposits but it could take two to three years to start having an impact on the pricing, Khara said.

SBI launched a green rupee fixed deposit scheme last month, with tenors of 1,111, 1,777 and 2,222 days and interest rates at around 10 basis points below the prevailing rates for similar tenors of regular fixed deposits.

SBI has started evaluating borrowers based on their environmental, social, and corporate governance ESG rating and is also engaging with rating entities to see if an accounting standard can be set for green financing, Khara said.

The RBI39;s framework for accepting fixed deposits, in force since last June, requires financial institutions to raise green deposits before financing any green projects, with the proceeds investable in liquid instruments with up to oneyear maturity.

Reporting by Siddhi Nayak in Mumbai; Editing by Sohini Goswami and Savio D39;Souza

Source Reuters