RBI Raises Banks’ Minimum Daily CRR Maintenance To 99% From 90% Amid ₹3.88 Lakh Crore Banking System Liquidity Surplus

The Reserve Bank of India (RBI) has raised the minimum daily cash reserve ratio (CRR) maintenance requirement for banks to 99% of the prescribed level, effective from the fortnight beginning 16 October 2026. The move follows a review of liquidity conditions in the banking system.

The decision comes as the banking system had a liquidity surplus of around ₹3.88 lakh crore as of 8 October. The RBI aims to absorb some of this excess liquidity by requiring banks to maintain a larger proportion of their prescribed CRR on each day.

What Has Changed In The RBI CRR Requirement?

Scheduled banks currently need to maintain at least 90% of their prescribed CRR on every day during a fortnight. The average CRR maintained over the fortnight must still be at least the level prescribed by the RBI.

From 16 October, the minimum daily maintenance requirement will rise to 99%. This reduces banks’ flexibility to maintain lower reserves on individual days while meeting the fortnightly average requirement.

The change concerns daily maintenance of the prescribed CRR; it does not mean that the overall CRR rate itself has been raised to 99%.

Why Is The RBI Absorbing Excess Banking System Liquidity?

The liquidity surplus was driven partly by strong mobilisation of foreign currency non-resident (FCNR(B)) deposits. Banks brought foreign currency into the system and subsequently swapped it with the RBI, providing rupee liquidity. Month-end government spending, including salary and pension payments, also added funds to the banking system.

The RBI has been using variable rate reverse repo (VRRR) auctions and open market operations to manage surplus funds over the past two months. The higher daily maintenance threshold adds to these efforts by tightening banks’ reserve-management requirements, although its precise impact on aggregate surplus liquidity will depend on banks’ positions and the RBI’s other operations.

What Does The Move Mean For Banks?

Banks will need to maintain reserve balances closer to the prescribed CRR level throughout the fortnight, reducing their room to manage short-term liquidity fluctuations. The measure changes daily maintenance requirements rather than the overall CRR rate.

Earlier in the week, RBI Governor Sanjay Malhotra had said the surplus liquidity would not persist beyond the end of FY27, while describing an increase in CRR as the least-preferred option. His remarks provide context for the decision, though the higher daily maintenance threshold should not be confused with an increase in the prescribed CRR rate.

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