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The RBI's new daily CRR rule: what changes for banks today, and what it means for your loan
From Friday, banks must keep at least 99% of their required cash reserve with the RBI every single day, up from 90%. It sounds technical. It is one of the ways the central bank is trying to make its rate rise bite.
The short answer
Every bank must keep 3% of its deposits and similar liabilities as cash with the RBI, measured as an average over a fortnight. Until now a bank could let its balance drop to 90% of that requirement on any day; from the fortnight beginning 16 October 2026 the floor is 99%, which leaves banks almost no room to dip into the reserve. The aim is to soak up surplus cash and push overnight interest rates up towards the 5.50% repo rate, which over time keeps loans dearer and supports deposit rates.
What is the CRR?
The cash reserve ratio is the share of its deposits that a bank must keep as cash with the Reserve Bank of India, where it earns no interest.
The ratio is set by the RBI and applies to a bank’s net demand and time liabilities, which in practice means mostly its deposits. As of October 2026 it is 3%. Money held this way cannot be lent out or invested. It is both a safety buffer and a lever the central bank can pull to change how much cash is sloshing around the banking system.
What exactly has changed?
The ratio stays at 3%. What has risen is the minimum a bank must hold on each day.
The 3% is measured as an average across a two-week reporting fortnight. That gives banks some flexibility: on a day when they are short of cash, they can let the balance fall below the requirement and make up for it later in the fortnight. Until now the balance could fall as low as 90% of the requirement on any day. From the fortnight beginning 16 October 2026, it cannot fall below 99%. The fortnightly average must still be at least 3%.
A bank that must hold ₹3,000 crore as CRR
Why does a few percentage points matter?
Because across the whole system, that flexibility is worth a great deal of cash.
When banks can run their reserve balance down, they can use that money for a few days to lend in the overnight market or park it elsewhere. Squeezing the room from ten percentage points to one ties up a larger share of reserves every day and leaves banks with less spare money to throw around.
Why is the RBI doing this now?
Because banks have too much cash, and that has kept short-term rates below the RBI’s policy rate.
The Monetary Policy Committee raised the repo rate by 25 basis points to 5.50% on 7 October. Yet the system was flush: surplus funds parked with the RBI stood at ₹3.88 lakh crore on 8 October. With so much money about, the call rate, at which banks lend to each other overnight, was 5.31% on 9 October, below the repo rate. A rate rise that does not reach the overnight market does not travel far.
The daily CRR change is one of several tools. The RBI sold ₹1 lakh crore of government bonds in September and another ₹25,000 crore on 13 October, and it has run reverse repo auctions in which banks lend money back to it.
Has this been done before?
Yes. The RBI raised the daily floor to 99% in July 2013, when the rupee was under pressure after the US Federal Reserve signalled it would slow its bond buying. It cut the floor to 95% two months later and to 90% in April 2016.
What does it mean for my home loan or deposit?
Not much directly, and not overnight.
Most new retail loans are linked to the repo rate, and those rates have already moved. After the October increase several state-owned banks raised their repo-linked lending rates by 25 basis points; Bank of Baroda’s went from 7.90% to 8.15%. Existing loans of this kind are usually reset within three months.
The CRR step works further back in the chain. Tighter cash makes it costlier for banks to raise money in the short-term market. That reduces the room for loan rates to fall and gives banks more reason to compete for deposits, which tends to support fixed deposit rates.
What happens next?
The RBI will watch whether the call rate climbs towards 5.50%. The minutes of the October policy meeting are due on 21 October, and the next MPC meeting is from 2 to 4 December 2026. If the surplus shrinks quickly, the RBI could ease the daily floor again, as it did in 2013.
The documents
- Section 42(1) of the Reserve Bank of India Act, 1934 - Change in Daily Minimum Cash Reserve Maintenance Requirement (notification listing)Reserve Bank of India, 9 October 2026