RBI Raises Daily CRR Maintenance to 99% of Requirement From Oct 16 (CRR Stays 3%): What It Means for Banks

The RBI daily CRR maintenance 99 percent rule sounds like plumbing, and it is, but the plumbing has a purpose. First, a clarification: 99% is not the CRR rate. It is the minimum share of each bank’s required CRR balance that has to sit with the RBI on every day of the fortnight, per the RBI notification. The CRR rate itself is unchanged at 3% of deposits. So from the fortnight beginning October 16, 2026, every scheduled bank has to hold at least 99% of its required cash reserve ratio (CRR) each single day, up from a floor of 90% earlier.

The Reserve Bank of India told banks about the change on Friday, October 9, through a notification to banks.

What the RBI daily CRR maintenance rule at 99 percent actually does

CRR is the slice of deposits banks must keep with the RBI as cash. It earns nothing, and it can’t be lent.

Banks meet CRR as an average across a 15-day fortnight. Until now, holding 90% of the requirement on any given day was enough. That gave treasuries room to run thin on some days and catch up later.

From October 16, that daily wiggle room drops from 10% to a mere 1%. The RBI’s wording is that the average maintained daily “shall not be less than the CRR prescribed”, and the daily minimum is now 99%.

Why the RBI did it: too much cash in the system

Put simply, the banking system is swimming in liquidity. The biggest single reason is the RBI’s FCNR(B) deposit scheme, launched on June 8, 2026 to prop up the rupee. Mint reports that banks raised about $127 billion in foreign-currency deposits before the scheme shut on August 31, and those deposits were exempt from CRR and SLR.

The numbers that matter:

• The liquidity surplus topped ₹10 trillion at its peak in early September (Mint).
• By the end of September it was around ₹4.7 trillion (Nomura, via Mint).
• BusinessLine says the surplus under the Liquidity Adjustment Facility has averaged ₹5.9 lakh crore a day since the August MPC meeting.

The RBI has already tried variable rate reverse repos, dollar/rupee swaps and roughly ₹1 trillion of open market bond sales. One more ₹25,000 crore OMO sale is lined up for October 13.

Not a CRR hike, say economists

Economists were quick to stress that the CRR itself hasn’t budged.

Bank of Baroda’s Madan Sabnavis told Mint it is “a temporary measure to take care of excess liquidity”. IDFC FIRST Bank’s Gaura Sengupta said it will tighten day-to-day compliance and nudge the call money rate closer to the repo rate.

Kotak Mahindra Bank’s Upasna Bharadwaj told BusinessLine that the change cuts into operational flexibility. It could also choke off speculative bets against the rupee that are funded with CRR money.

Context: a tightening RBI

This came only days after the RBI lifted the repo rate by 25 basis points to 5.5% on October 7 to tackle rising inflation, and hinted more hikes could follow. Governor Sanjay Malhotra had earlier called an outright CRR hike one of the RBI’s “least preferred” tools.

What it means for banks and Bank Nifty

• Less room to manage cash: treasuries can no longer play overnight rates as freely within the fortnight.
• Firmer short-term rates: overnight rates should drift up towards the 5.5% repo rate, which could push deposit and money-market costs a little higher.
• Limited hit to margins: the average CRR hasn’t changed, so the direct cost to banks stays small.

Still, the market took it as another tightening signal, and Bank Nifty slipped 339 points on Monday, October 12. Our Bank Nifty today report has the details, and the Stock Market Today India hub has the broader picture.

If you’re an investor, the thing to watch is the RBI’s next move on liquidity. Should the surplus keep shrinking through OMOs and FX intervention, this rule may well be relaxed again.

Sources: RBI notification; Mint (Oct 9, 2026); The Hindu BusinessLine (Oct 9, 2026).