The Reserve Bank has amended the Cash Reserve Ratio and Statutory Liquidity Ratio for Rural Co-operative Banks, introducing a US Dollar-Rupee swap facility for FCNR deposits. This aims to enhance the banks' liquidity management capabilities.
RBI Amends Directions for Rural Co-operative Banks
On June 8, 2026, the Reserve Bank of India released the (Rural Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Second Amendment Directions, 2026. This amendment is in line with the Governor's previous announcement on June 5, 2026, concerning a new US Dollar-Rupee swap facility for FCNR (B) dollar funds, intended for mobilisations with a tenor ranging from three to five years.
The introduction of this facility is expected to empower Rural Co-operative Banks with better liquidity management tools, enabling them to operate more effectively in the foreign exchange market. The regulatory enhancement is poised to mitigate challenges faced by these banks in managing currency exposure.
Practitioners should note the importance of this amendment in advising clients involved in rural financing and co-operative banking. Legal professionals may need to facilitate compliance efforts in light of these new developments.
Citations
- RBI/2026-27/105 (2026) RBI Notification
