RBI Update: Big news for bank customers. The RBI has announced a new rule, increasing the minimum daily Cash Reserve Ratio (CRR) requirement from 90% to 99%, effective from October 16, 2026. This decision was taken after assessing the liquidity situation. It’s important to note that this adjustment does not mean that banks will now hold 99% of customer deposits with the RBI. The modification pertains to the fixed cash reserve that banks must maintain daily.
RBI Tightens Rule
CRR, which stands for Cash Reserve Ratio, determines the amount of funds a bank must retain with the RBI based on its deposits and liabilities. For instance, if a bank needs to maintain Rs 100 crore as per CRR, under the previous rule, it could keep a minimum of Rs 90 crore daily but had to average Rs 100 crore over a fortnight. With the new regulation, the minimum daily requirement increases to Rs 99 crore, reducing the leeway for daily fluctuations from Rs 10 crore to Rs 1 crore.
Banks will now need to closely monitor their daily cash balances, as almost the entire required reserve must be kept with the RBI daily. While complying may be straightforward for well-funded banks, those facing cash shortages might need to seek additional funding sources, potentially impacting daily operations.
This directive does not specify a total withdrawal from the banking system due to the change. It also does not imply an immediate increase in EMIs or alterations to interest rates on loans. Changes in loan pricing in the future could be influenced by potential increased funding costs for banks, but the impact will vary based on individual bank circumstances and market conditions.
There are no indications of adjustments to FD rates or new restrictions on customer withdrawals in this directive. Investors should monitor how banks manage their cash reserves and funding costs. Each bank’s response to this rule may differ, as they will now need to maintain nearly all required cash reserves with the RBI daily. Decisions related to customer EMIs or fixed deposits will be separate from this regulatory change.