The Reserve Bank has issued amendments for Urban Co-operative Banks’ Cash Reserve Ratio and Statutory Liquidity Ratio, including a US Dollar-Rupee swap facility for FCNR (B) deposits. This aims to support liquidity management in the sector.
RBI Updates Urban Co-operative Banks' Liquidity Management
On June 8, 2026, the Reserve Bank of India published the (Urban Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Second Amendment Directions, 2026. This update follows the Governor's statement on June 5, 2026, announcing the implementation of a US Dollar-Rupee swap facility for fresh FCNR (B) deposits, which can now be mobilised for a minimum duration of three years and up to five years.
This modification aims to enhance the liquidity management capabilities of Urban Co-operative Banks, providing them with new tools to better navigate the complexities of foreign currency deposits. The facility will enable these banks to deepen their market participation and manage currency exposure more effectively.
Legal practitioners should prepare for potential inquiries from clients concerning compliance with this regulatory change. It is essential to provide guidance to Urban Co-operative Banks on the implications of this facility for their operations and reporting obligations.
Citations
- RBI/2026-27/104 (2026) RBI Notification
