RBI Raises Daily CRR Maintenance to 99% From Oct 16: What It Means

The Reserve Bank of India (RBI) has tightened how banks must hold their mandatory cash reserves. From the fortnight beginning October 16, 2026, banks will have to keep at least 99 percent of their prescribed Cash Reserve Ratio (CRR) balance with the RBI on every single day, up from 90 percent now. The central bank announced the change on Saturday, October 10, after reviewing liquidity in the banking system.

The move does not raise the CRR rate itself. Instead, it removes most of the day-to-day flexibility banks had in managing those reserves, and it is aimed squarely at mopping up surplus cash sloshing around the system.

What Exactly Has Changed

Every bank must park a set share of its deposits with the RBI as CRR. Compliance is measured as an average over a two-week reporting fortnight, but there has also been a daily floor. Until now, a bank could drop to 90 percent of the required amount on any given day, as long as it made up the difference on other days so the fortnightly average was met.

Under the new rule, the daily floor rises to 99 percent. In practice, banks can no longer run their CRR balances down sharply on some days to lend that money in the overnight market. The fortnightly average requirement remains the same.

RBI's Decision at a Glance

Why the RBI Is Doing This

Banking-system liquidity was in surplus by about Rs 3.88 lakh crore as of October 8. That surplus has built up for a few reasons. Banks have mobilised large amounts of FCNR(B) foreign-currency deposits and swapped the dollars with the RBI for rupees, adding cash to the system. Month-end salary and pension payments by the government added more.

Too much spare cash pushes overnight interest rates below the RBI's policy rate, which weakens the signal of monetary policy. That matters now because the RBI raised the repo rate to 5.5 percent earlier this month, its first hike since 2023. If short-term market rates stay far below the repo rate, the tightening does not fully reach borrowers and savers.

Over the past two months, the RBI has already used variable rate reverse repo auctions and open market operations to drain liquidity. The higher daily CRR floor adds one more tool.

What the Governor Said

RBI Governor Sanjay Malhotra said on Saturday that the surplus would not persist beyond the end of the current financial year, FY27. He also described an outright increase in the CRR rate as the least preferred option, which helps explain why the central bank chose to tighten the daily maintenance rule instead.

What It Means for You

• Loan rates: Tighter liquidity can push up short-term money market rates. Over time, this can feed into lending rates on products linked to market benchmarks.
• Deposit rates: When cash gets scarcer, banks sometimes compete harder for deposits, which can support fixed deposit rates.
• Banks: Treasury teams lose some flexibility and will need to manage daily cash more carefully, especially around tax-payment dates and festive-season withdrawals.
• Markets: Bond and money-market traders will watch overnight call rates closely after October 16 to see how much surplus the rule actually absorbs.

The exact impact will depend on how individual banks were using the old 90 percent cushion and on the RBI's other liquidity operations in the coming weeks.

What Happens Next

1. The new 99 percent daily floor applies from the reporting fortnight starting October 16.
2. The RBI is expected to keep using reverse repo auctions alongside the new rule if the surplus remains large.
3. Festive-season cash demand around Dussehra and Diwali typically drains some liquidity, which could ease the need for further steps.
4. The next monetary policy review will show whether the RBI sees liquidity moving closer to neutral.

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