The RBI now permits scheduled banks to maintain daily CRR at no less than 90% of requirement, subject to average fortnightly compliance, enhancing operational flexibility while ensuring liquidity stability.
RBI Tightens CRR Maintenance Norms
Through notification dated October 9, 2026, the Reserve Bank of India amended the cash reserve ratio (CRR) maintenance norms under Section 42(1) of the Reserve Bank of India Act, 1934. The updated directive allows scheduled commercial banks to maintain a daily CRR balance of not less than 90 percent of the required amount during each fortnight, provided the average daily maintenance equals or exceeds the stipulated CRR.
This modification introduces a degree of flexibility in daily liquidity management while preserving the integrity of the overall reserve requirement. Previously, strict daily adherence created short-term volatility in interbank liquidity markets, especially at reporting week ends. The new corridor-based system mirrors international central banking practices, allowing banks to optimise surplus deployment without breaching regulatory minima.
The RBI stressed that consistent under-maintenance below 90% will attract supervisory action, underscoring that operational flexibility does not equate to reduced accountability. Banks must monitor internal early warning indicators and ensure treasury operations align with the revised guardrails.
For banking lawyers, this circular signals a regulatory shift toward outcome-based compliance. Institutions may need to revise internal treasury manuals and update audit protocols to reflect the new averaging mechanism. The change also has implications for short-term money market dynamics and repo operations, warranting close attention in both advisory and transactional work.
Citations
- Section 42(1), Reserve Bank of India Act, 1934; RBI/2026-27/290, October 09, 2026
