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The Reserve Bank of India (RBI) has increased the minimum daily Cash Reserve Ratio (CRR) maintenance requirement for scheduled banks to 99 per cent from the existing 90 per cent, effective from the fortnight beginning October 16, 2026.
The decision, announced in a notification issued by the RBI on Friday, follows a review of prevailing liquidity conditions. Under the revised requirement, scheduled banks will have to maintain at least 99 per cent of their prescribed CRR on each day during the reporting fortnight, compared with the earlier minimum of 90 per cent. Currently, banks are permitted to maintain a minimum of 90 per cent of their required CRR on individual days during a reporting fortnight, provided that the average of the daily balances does not fall below the CRR prescribed by the central bank. With the revised requirement, banks will have significantly less flexibility in managing their daily reserve balances, as they will need to keep their daily CRR holdings much closer to the prescribed requirement throughout the reporting fortnight. The new rule will take effect from the reporting fortnight commencing October 16, according to the RBI notification signed by Manoranjan Padhy, Chief General Manager in the central bank's Department of Regulation. CRR refers to the portion of their net demand and time liabilities that banks are required to maintain as cash reserves with the RBI. The daily maintenance requirement determines the minimum proportion of the prescribed reserve that banks must hold on individual days, even as compliance is assessed on the basis of the average balance over the reporting fortnight. For banks, the move means reduced flexibility in managing their daily cash reserves, as a larger proportion of the prescribed CRR will have to be maintained each day. An increase in the CRR generally requires banks to keep more funds with the RBI, leaving them with less money available for lending and other uses. This can tighten liquidity in the banking system, potentially increase funding costs for banks and affect credit availability if they have fewer funds available to deploy. However, the latest RBI decision specifically raises the minimum daily maintenance threshold and does not, by itself, increase the prescribed CRR rate. The RBI's latest decision changes the minimum daily maintenance threshold while retaining the requirement that the average CRR maintained over the reporting fortnight must not fall below the prescribed level. (ANI)
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