The Reserve Bank of India (RBI) has announced tighter liquidity management measures, raising the minimum daily cash reserve ratio (CRR) maintenance requirement from 90% to 99%, effective from the reporting fortnight beginning Oct 16, 2026.
The decision follows a 25-basis-point increase in the policy repo rate to 5.50%, the first hike in two-and-a-half years.
The central bank has also scheduled an open market operation (OMO) sale of government securities worth ₹25,000 crore on Oct 13 to absorb surplus banking liquidity.
Daily CRR requirement raised
Under the revised rules, banks must maintain at least 99% of their prescribed CRR requirement every day during the reporting fortnight.
They must also ensure that their average CRR balance over the fortnight meets the full prescribed requirement of 3% of applicable deposits.
CRR represents the portion of deposits banks must hold with the RBI without earning interest.
The higher daily maintenance threshold reduces banks' flexibility in managing short-term liquidity.
The RBI last introduced a 99% daily CRR requirement in July 2013 during currency market volatility associated with the US Federal Reserve's taper tantrum.
It subsequently lowered the threshold to 95% in September 2013 and 90% in April 2016.
RBI targets surplus liquidity
Banking system surplus liquidity stood at ₹3.88 lakh crore on Oct 8, measured through funds parked under the RBI's liquidity adjustment facility.
The central bank aims to bring the weighted average call rate (WACR) closer to the 5.50% policy repo rate.
On Friday, the WACR stood at 5.31%, marginally above Thursday's 5.30%.
The standing deposit facility rate of 5.25% forms the lower boundary of the interest rate corridor, while the marginal standing facility rate of 5.75% sets the upper limit.
Since August's monetary policy review, the WACR has averaged 14 basis points below the repo rate.
RBI Governor Sanjay Malhotra said the central bank would deploy suitable liquidity management instruments to improve alignment between short-term market rates and the policy benchmark.
