RBI changes CRR rules from October 16: How will the new 99% requirement affect banks?

The Reserve Bank of India (RBI) has tightened the rules governing how much cash banks must keep in reserve each day, raising the minimum daily Cash Reserve Ratio (CRR) maintenance requirement from 90% to 99%. The revised rule will take effect from the reporting fortnight beginning October 16, 2026.

The decision, announced through a notification issued on Friday, follows a review of prevailing liquidity conditions. While the overall CRR requirement remains unchanged, banks will have less flexibility to manage their reserve balances on individual days.

What has the RBI changed?

Under the existing rules, scheduled banks must maintain at least 90% of their prescribed CRR on any given day during a reporting fortnight. They must also meet the full prescribed CRR requirement on an average basis over the fortnight.

With the latest revision, banks will have to maintain at least 99% of their prescribed CRR every day during the reporting fortnight. The average requirement across the fortnight, however, remains unchanged.

The notification was signed by Manoranjan Padhy, Chief General Manager in the RBI's Department of Regulation.

What is CRR and why does it matter?

The Cash Reserve Ratio is the proportion of a bank's net demand and time liabilities (NDTL) that it must keep as cash reserves with the RBI.

The central bank uses the CRR framework to manage liquidity in the banking system and support the transmission of monetary policy. These reserves also ensure that banks maintain a portion of their liabilities in cash with the central bank.

How will the change affect banks?

The higher daily threshold means banks will have less room to let their reserve balances fall below the prescribed CRR on individual days, even if they can meet the fortnightly average requirement.

Banks may need to monitor cash flows more closely and plan for short-term liquidity needs with greater care. Temporary cash outflows could become more challenging to manage under the tighter daily requirement, potentially affecting short-term funding costs.

Does this mean a higher CRR?

No. The RBI has changed the minimum daily maintenance threshold, not the prescribed CRR rate itself.

Banks will continue to be assessed against the existing average CRR requirement over the reporting fortnight. However, they must now comply with the higher minimum threshold on every day of that period, starting October 16, 2026.