Scheduled banks may now maintain daily CRR at 90% of required levels, provided fortnightly averages meet statutory norms. The revised guidelines under Section 42(1) of the RBI Act offer operational flexibility without compromising liquidity management.
RBI Introduces Flexibility in Daily CRR Compliance
The Reserve Bank of India, through notification RBI/2026-27/290 dated October 9, 2026, has amended the daily minimum cash reserve maintenance requirement under Section 42(1) of the Reserve Bank of India Act, 1934. Scheduled banks are now permitted to maintain a daily Cash Reserve Ratio (CRR) of not less than 90 percent of the required amount during a reporting fortnight, provided that the average CRR maintained over the fortnight equals or exceeds the stipulated statutory requirement.
This update provides greater operational flexibility to banks in managing liquidity pressures, particularly during periods of high volatility or large fund movements. It replaces earlier rigid daily compliance norms, allowing banks to smooth out daily reserve fluctuations while ensuring systemic liquidity stability.
The change reflects the RBI’s shift towards outcomes-based regulation—emphasizing average compliance over mechanistic daily adherence. Banks must, however, maintain accurate records and internal controls to demonstrate compliance during audits. The directive does not alter the overall CRR percentage, only the timing and distribution of compliance within the reporting cycle.
For legal practitioners, this development reduces the risk of inadvertent defaults due to short-term liquidity mismatches. Institutions must, however, update treasury and compliance manuals to reflect the new guidelines. The revision also impacts internal monitoring frameworks, especially for banks with high transaction volumes.
Citations
- Reserve Bank of India Act, 1934, Section 42(1)
