Stories
RBI's New CRR Rule Effective Today: Banks Must Maintain 99%
- •Under RBI's new rule effective today, banks must maintain 99 percent of their Cash Reserve Ratio daily with the Reserve Bank, up from 90 percent earlier.
- •The decision aims to control excess liquidity in the banking system, which stood at approximately Rs 3.88 lakh crore as of October 8.
- •RBI has also instructed banks to set aside separate funds for certain dollar-related contracts, which could increase banks' costs.
- •The cost of forward contracts and buying dollars may increase for importing companies, impacting certain business operations.
- •Interest rates on common people's home loans, personal loans, or fixed deposits may not see an immediate change due to this rule.
Key Questions Answered
Starting October 16, 2026, scheduled banks must maintain at least 99% of their prescribed Cash Reserve Ratio (CRR) on a daily basis with the Reserve Bank of India, up from the previous limit of 90%.
The RBI tightened the daily requirement because the banking system had considerable excess liquidity, reaching approximately Rs 3.88 lakh crore as of October 8. This change reduces banks' daily flexibility and helps the central bank manage day-to-day liquidity conditions.
Banks are required to maintain 20% of the rupee value of certain dollar-related derivative contracts as a Foreign Exchange Reserve Ratio (FERR) in their CRR accounts. Since banks earn no interest on this amount, their operating costs increase, which can raise the cost of forward contracts and importing dollars.
