RBI Tightens Cash Rules for Banks: Daily CRR Requirement Raised to 99% From October 16

The Reserve Bank of India (RBI) has tightened cash reserve requirements for banks, increasing the minimum daily maintenance of the Cash Reserve Ratio (CRR) from 90% to 99%. The revised rule will come into effect from the fortnight beginning October 16, 2026. The move comes after the central bank recently raised the policy repo rate and aims to improve control over liquidity in the banking system. 

What Is Changing for Banks?

CRR is the portion of a bank’s deposits that it must maintain as cash reserves with the RBI. Banks do not earn interest on these mandatory reserves. Under the revised requirement, banks will have to maintain at least 99% of their prescribed CRR amount on a daily basis, compared with the earlier minimum of 90%.The change will reduce banks’ flexibility in managing their daily cash balances and make it harder for them to compensate for lower reserve holdings on one day by maintaining higher balances on another. The overall prescribed CRR ratio itself has not been increased under this particular measure. 

RBI to Sell Government Bonds Worth ₹25,000 Crore

Alongside the revised CRR requirement, the RBI has announced an open market sale of government securities worth ₹25,000 crore, scheduled for October 13. The bond sale is intended to absorb excess funds from the banking system.The central bank’s move comes amid a substantial liquidity surplus in the financial system. By tightening daily reserve requirements and withdrawing excess liquidity, the RBI aims to bring short-term market interest rates more closely in line with its policy rate. 

How Could the Move Affect the Financial Market?

The stricter rules could reduce the amount of money banks have available for day-to-day deployment in the financial market. They may also put upward pressure on short-term borrowing rates between financial institutions.However, the revised daily CRR requirement should not be confused with an increase in the overall CRR rate. The measure primarily changes how much of the prescribed reserve banks must maintain each day, giving them less flexibility in managing liquidity.