1 hr ago
RBI Raises Daily CRR Maintenance Requirement to 99%
Banks must keep some of their customers’ money with the Reserve Bank of India.
The RBI has not changed the total amount banks must keep on average over two weeks.
But it has raised the minimum amount banks must hold each day, from 90% to 99% of the required reserve.
This means banks have less freedom to hold less on one day and catch up later.
The change begins in the fortnight starting October 16, 2026.
The RBI says the rule applies while the banking system has had a large surplus of cash.
Officials and market participants expect it may help overnight borrowing rates move closer to the RBI’s 5.5% repo rate.
The RBI is also removing extra cash from the system through bond sales and other operations.
The Reserve Bank of India raised the minimum daily CRR maintenance requirement for banks from 90% to 99%, effective from the fortnight beginning October 16, 2026.
The overall CRR remains unchanged at 3% of deposits, and banks must still meet that full requirement on average over the reporting fortnight.
The tighter daily rule reduces banks’ flexibility to make up reserve shortfalls later in the fortnight and is expected to help move overnight call rates toward the 5.5% repo rate.
Articles report that liquidity had surged after FCNR(B) deposits, with one citing a peak above ₹10 trillion in early September and another reporting ₹3.88 lakh crore on Thursday.
The RBI has been absorbing surplus liquidity through reverse repo auctions and bond sales, including a further ₹25,000 crore OMO sale announced for October 13.
- Who
- The Reserve Bank of India changed the daily CRR maintenance rule for banks.
- What
- Banks must maintain at least 99% of their required CRR each day, up from 90%; the overall CRR remains 3%.
- Where
- India’s banking system.
- When
- The change takes effect from the fortnight beginning October 16, 2026.
- Why
- The change is intended to tighten daily reserve compliance and help manage surplus liquidity and overnight money-market rates.
Liquidity management rationale
Banking and market concerns
Purpose and duration of the rule
Liquidity management rationale
Madan Sabnavis described the change as a temporary measure to manage excess liquidity, not an increase in the headline CRR.
Banking and market concerns
Gopal Tripathi said the move was not anticipated by the market and reduces banks’ ability to manage daily cash balances.
Effect on overnight rates
Liquidity management rationale
Gaura Sengupta said tighter daily compliance should help the call rate move toward the repo rate and should not be viewed as a withdrawal because banks still meet the full CRR on average over the period.
Banking and market concerns
Market participants warned that banks’ greater daily funding needs could push overnight borrowing rates higher.
Key facts
- Minimum daily CRR maintenance
- Raised from 90% to 99% of the required CRR
- Headline CRR
- Unchanged at 3% of deposits
- Effective date
- Fortnight beginning October 16, 2026
- Repo rate
- 5.5%; the second article says it was raised by 25 basis points
- Weighted average call rate
- 5.31% on Friday, according to the first article
- Liquidity measures
- The RBI announced an additional ₹25,000 crore OMO bond sale for October 13
- FCNR(B) deposits
- Banks raised $127 billion under the scheme, according to the second article
Quotes
Sanjay Malhotra
Governor of the Reserve Bank of India.
“The operational flexibility was that a bank could maintain the CRR at a minimum of 90% on any given day, provided the fortnightly average remained 100%. That flexibility has now been withdrawn. Under the new notification, banks must maintain at least 99% of the required CRR every day, eliminating much of the ability to average daily balances across the fortnight.”
financialexpress.com
“I wouldn’t say this is a case of increasing the CRR. It is a temporary measure to take care of excess liquidity. The CRR requirement itself has not changed, but the amount banks have to maintain on a daily basis has increased.”
livemint.com
Money market dealer at a state-owned bank
Money market dealer at a state-owned bank
“Overnight rates are likely to rise as daily funding requirements may increase.”
financialexpress.com
Sources
Related news
RBI Announces ₹1 Trillion Bond Sales Amid Liquidity Surplus
RBI Rate Hike May Boost Margins but Delay Deposit Increases
RBI Schedules ₹25,000 Crore Bond Sale for October 13
FCNR(B) inflows reach $133 billion, boosting reserves but straining liquidity
RBI Absorbs Surplus Liquidity Through Variable Rate Reverse Repo Auctions
Why $143.5 Billion FCNR Inflows May Not Ensure Bank Liquidity
Rabi Crop Risks Put Banks’ Agricultural Loan Books in Focus
Why India’s Forex Reserves Fell Despite Record FCNR(B) Inflows
Rupee Slips to 96.88 as Global Risks Weigh
