Every bank in India has to set aside part of its deposits before it lends a rupee. The Cash Reserve Ratio (CRR) is the share it must keep as cash balances with the RBI, earning nothing. The Statutory Liquidity Ratio (SLR) is the share it must hold itself in safe, liquid assets, mostly government securities. Both are measured against the bank's net demand and time liabilities (NDTL). As of 24 October 2026, CRR is 3.00% and SLR is 18.00% of NDTL. This part explains what NDTL is, how each ratio works in law and in daily practice, how the ratios have moved since the days when they swallowed more than half of bank resources, and how a CRR change translates into lakh crores of liquidity.
This part builds on how monetary policy works in India (Part 3), which places CRR and SLR among the RBI's instruments, and on repo rate, reverse repo rate and the SDF (Part 4), which covers the policy rates and the MSF. The history of reserve requirements before 1991 is outlined in the history and evolution of the RBI.
In the news
- 9 October 2026: daily CRR floor raised to 99%. The RBI raised the minimum CRR balance that scheduled banks must keep on every day of the fortnight from 90% to 99% of the requirement, from the fortnight beginning 16 October 2026, citing liquidity conditions. The CRR itself stayed at 3%. Why it matters for the exam: the daily minimum and the CRR rate are two different things, and only the first changed.
- 7 October 2026: repo hiked, CRR unchanged. The MPC raised the repo rate to 5.50%. The Governor said system liquidity had averaged a surplus of ₹5.9 lakh crore a day since the August policy, and that net non-resident deposit inflows were US$119.2 billion in April–August 2026, against US$5.6 billion a year earlier. Why it matters for the exam: a big liquidity surplus is the background to the tighter daily CRR rule two days later.
- 8 June 2026: fresh FCNR(B) deposits exempted from CRR and SLR. Following the policy of 5 June, the RBI issued directions exempting fresh US dollar FCNR(B) deposits of 3 to 5 years raised between 8 June and 30 September 2026 from CRR and SLR. Why it matters for the exam: exempting a liability from NDTL is a way to encourage it, here to attract foreign currency.
- 15 December 2025: a new fortnight. The Banking Laws (Amendment) Act, 2025 redefined the reporting fortnight for CRR and SLR. It now runs from the 1st to the 15th and from the 16th to the last day of each month, instead of Saturday to the second following Friday. Why it matters for the exam: that is why the 99% rule starts on "16 October".
- 29 November 2025: CRR reaches 3%. The last of four 25 bp tranches of the 100 bp CRR cut announced on 6 June 2025 took effect. Why it matters for the exam: 3% equals the pandemic low of 2020–21.
- 28 November 2025: consolidated directions. The RBI issued the Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025, replacing earlier circulars with a single rulebook. Why it matters for the exam: this document now holds the NDTL rules, exemptions and penalties for commercial banks.
What NDTL means
Liabilities, demand and time
Both ratios are percentages of NDTL, so start there. A bank's deposits are its liabilities: money it owes to depositors.
- Demand liabilities are payable on demand: current account balances, the demand portion of savings deposits, call deposits, overdue fixed deposits, demand drafts outstanding and similar items.
- Time liabilities are payable after a period: fixed deposits, recurring deposits, the time portion of savings deposits and similar items.
Together these make demand and time liabilities (DTL). Capital and reserves are not liabilities to others, so they are not part of DTL.
Why "net"
Banks also borrow from and lend to each other. NDTL nets these out:
NDTL = demand and time liabilities to others + (liabilities to the banking system − assets with the banking system)
The net inter-bank position is added only if it is a net liability. The logic is simple: if every bank kept reserves on what it owed every other bank, the same money would be reserved twice.
Exemptions
The RBI can exclude particular liabilities from NDTL for CRR. Under the 2025 Directions these include net inter-bank liabilities, liabilities of offshore banking units, market repo borrowings, eligible long-term bonds and specific deposit windows, such as the NRE and FCNR(B) deposits of the 2022 window and the FCNR(B) deposits of 2026. Exemption is a policy tool in its own right: it makes a source of funds cheaper for banks.
The reference date
Banks do not keep reserves on today's NDTL. They keep them on NDTL as of the last day of the second preceding fortnight. For the fortnight of 16–31 October 2026, the preceding fortnight is 1–15 October and the second preceding one is 16–30 September, so the base is NDTL as of 30 September 2026.
Cash Reserve Ratio
The law
The CRR comes from Section 42(1) of the RBI Act, 1934. Every scheduled bank must keep an average daily balance with the RBI of at least the percentage of its NDTL that the RBI notifies. Scheduled banks have had to keep reserves with the RBI since 1935. Non-scheduled banks keep their cash reserves under Section 18 of the Banking Regulation Act, 1949, which they may hold with themselves or the RBI.
Two features of today's law come from the RBI (Amendment) Act, 2006:
- No floor or ceiling. The old Act fixed the CRR between 3% and 20%. Section 3 of the 2006 amendment, in force from 1 April 2007, removed both limits, so the RBI may set any rate "having regard to the needs of securing the monetary stability in the country".
- No interest. The same amendment omitted Section 42(1B), which had required the RBI to pay interest on eligible CRR balances. No interest has been paid on CRR balances since the fortnight beginning 31 March 2007.
Since CRR balances earn nothing, the CRR is in effect a tax on deposits. That is why banks lobby for cuts and why a CRR cut lowers their cost of funds.
Fortnightly average, daily minimum
The CRR is an average over the reporting fortnight. A bank may hold less on one day and more on another, provided:
- the average over the fortnight is at least 100% of the requirement; and
- the balance on every day is at least a set minimum share of it.
The daily minimum has moved with liquidity conditions:
| From fortnight beginning | Daily minimum | Context |
|---|---|---|
| 28 December 2002 | 70% | Flexibility for banks |
| 27 July 2013 | 99% | Squeeze on rupee liquidity during the taper tantrum |
| 21 September 2013 | 95% | Partial easing |
| 16 April 2016 | 90% | Further easing |
| 28 March 2020 | 80% | Temporary pandemic relief in 2020 |
| 16 October 2026 | 99% | Large liquidity surplus after the October hike |
A higher daily minimum leaves banks less room to run down reserves on a given day and lend the money in the call market. In a surplus, that keeps more money locked away and helps keep overnight rates from sinking below the policy rate.
Example. A bank's required CRR for the fortnight is ₹3,000 crore.
- Under the 90% rule, its balance could fall to ₹2,700 crore on some days, a dip of up to ₹300 crore.
- Under the 99% rule, it must keep at least ₹2,970 crore every day, a dip of no more than ₹30 crore.
- In both cases the fortnight's average must still be at least ₹3,000 crore.
Penalties
Section 42(3) sets penal interest, linked to the Bank Rate (5.75% now):
- First default: 3% a year above the Bank Rate on the shortfall, that is 8.75% today.
- Continued default: 5% a year above the Bank Rate, that is 10.75% today, if the shortfall continues into the next fortnight (or the next day, for the daily minimum).
- Persistent default: if the default goes on, Section 42 also allows fines on the officers responsible and lets the RBI stop the bank taking fresh deposits.
Example. For the 16-day fortnight of 16–31 October 2026, a bank's average CRR balance falls ₹50 crore short of the requirement. Penal interest at 8.75% a year:
- ₹50 crore × 8.75% × 16 ÷ 365
- = ₹50 crore × 0.0875 × 0.043836
- = ₹0.1918 crore, or about ₹19.18 lakh
If the shortfall continued into the next fortnight, the rate for that fortnight would be 10.75%.
Why the RBI changes the CRR
A CRR cut releases durable liquidity: money that stays in the system, unlike a repo loan that must be repaid. It also cuts banks' cost of funds, since less of each deposit sits idle. A CRR hike does the opposite. The RBI uses it:
- to add liquidity when it is short (2020, December 2024, 2025);
- to drain liquidity when it is too abundant or inflation is rising (2022);
- to cushion shocks, as in the 2008 crisis, when the CRR was cut from 9% to 5% between October 2008 and January 2009.
How much money does a CRR change release?
The arithmetic
Liquidity released = change in CRR × NDTL
The RBI states the amount when it announces each change. Working backwards from those statements gives the size of the NDTL base each time:
| Announcement | Change | RBI's estimate | Implied NDTL |
|---|---|---|---|
| 27 March 2020 | −100 bp (4% → 3%) | ₹1.37 lakh crore released | about ₹137 lakh crore |
| 4 May 2022 | +50 bp (4% → 4.5%) | about ₹87,000 crore absorbed | about ₹174 lakh crore |
| 6 December 2024 | −50 bp (4.5% → 4%) | ₹1.16 lakh crore released | about ₹232 lakh crore |
| 6 June 2025 | −100 bp (4% → 3%) | about ₹2.5 lakh crore released | about ₹250 lakh crore |
For example, ₹1.16 lakh crore ÷ 0.005 = ₹232 lakh crore. The same 100 bp cut released almost twice as much money in 2025 as in 2020, because deposits had grown.
Worked example: one bank
For illustration, take a bank with NDTL of ₹10 lakh crore.
- At CRR 4%: reserves = ₹10 lakh crore × 0.04 = ₹40,000 crore.
- At CRR 3%: reserves = ₹10 lakh crore × 0.03 = ₹30,000 crore.
- Released: ₹10,000 crore.
If the bank parks that ₹10,000 crore in the SDF at 5.25%, it earns about ₹525 crore a year. If it lends it at, say, 9%, it earns about ₹900 crore a year, before costs. Either way, money that earned nothing now earns something, which is why the RBI said the 2025 cut would "reduce the cost of funding of the banks".
The money multiplier
The textbook view says a cut in reserves lets the banking system create a multiple of the released money as deposits. With a reserve ratio r and a currency-to-deposit ratio c (cash the public keeps out of banks), the multiplier is:
m = (1 + c) ÷ (c + r)
Take an illustrative c of 0.15 and treat the CRR as the only reserve:
- at r = 4%: m = 1.15 ÷ 0.19 = 6.05
- at r = 3%: m = 1.15 ÷ 0.18 = 6.39
If c were zero, the multiplier would be simply 1 ÷ r: 25 at 4% and 33.3 at 3%. That simple version overstates things badly. In practice, banks hold excess reserves, the public holds more cash when incomes rise, banks lend only when there is demand for credit, and the RBI now steers the interest rate rather than the amount of reserves. A CRR cut in a surplus may end up parked in the SDF rather than lent. Treat the multiplier as an exam formula, not a forecast.
The 2025 CRR cut
On 6 June 2025, along with a 50 bp repo cut, the Governor announced a 100 bp CRR cut to 3.0%, "in four equal tranches of 25 bps each":
| Fortnight beginning | CRR |
|---|---|
| 6 September 2025 | 3.75% |
| 4 October 2025 | 3.50% |
| 1 November 2025 | 3.25% |
| 29 November 2025 | 3.00% |
The RBI said the cut "would release primary liquidity of about ₹2.5 lakh crore to the banking system by December 2025" and that, "besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market".
Three points are worth noting:
- Tranches smooth the effect. Releasing ₹2.5 lakh crore at once would have flooded the overnight market. Spreading it over four fortnights let banks and the RBI adjust.
- It came in two moves. The CRR had already been cut from 4.5% to 4% in December 2024, in two tranches effective 14 and 28 December 2024. Over a year, the CRR fell 150 bp.
- It has not been reversed. By October 2026 the RBI faced a large surplus and raised the repo rate. It chose to tighten the daily minimum and sell bonds through OMOs, and left the CRR at 3%.
Incremental CRR
An ordinary CRR applies to all of a bank's NDTL. An incremental CRR (I-CRR) applies only to the increase in NDTL over a set period. It is a targeted tool for a one-off surge in deposits. The RBI has used it twice in the last decade.
2016: demonetisation
When the ₹500 and ₹1,000 notes lost legal tender status in November 2016, the old notes poured into banks as deposits. On 26 November 2016 the RBI imposed an incremental CRR of 100% on the increase in NDTL between 16 September and 11 November 2016, from the fortnight beginning 26 November. Every extra rupee of deposits in that window had to be kept with the RBI. The press put the increase in deposits at about ₹3.24 lakh crore.
The measure lasted two fortnights. On 7 December 2016 the RBI withdrew it from the fortnight beginning 10 December 2016, because the government had raised the ceiling for Market Stabilisation Scheme (MSS) securities to ₹6,000 billion, and MSS bonds and LAF operations could absorb the money instead.
2023: return of ₹2,000 notes
After the RBI withdrew ₹2,000 notes from circulation in May 2023, deposits rose again. On 10 August 2023 the RBI imposed an I-CRR of 10% on the increase in NDTL between 19 May and 28 July 2023, from the fortnight beginning 12 August 2023. Estimates put the amount impounded at about ₹1 lakh crore.
On 8 September 2023 the RBI decided to end it in phases, releasing the impounded money in three steps: 25% on 9 September, 25% on 23 September and 50% on 7 October 2023. Phasing avoided a sudden jump in liquidity.
Example
A bank's NDTL was ₹2,00,000 crore on 19 May 2023 and ₹2,08,000 crore on 28 July 2023.
- Increase = ₹8,000 crore.
- I-CRR at 10% = ₹800 crore, on top of the ordinary CRR on its whole NDTL.
Under the 2016 rule of 100%, the same increase would have locked up all ₹8,000 crore.
Statutory Liquidity Ratio
The law
The SLR comes from Section 24 of the Banking Regulation Act, 1949, and applies to all banks, not just scheduled ones. Under Section 24(2A), a bank must keep liquid assets of at least the percentage of its DTL that the RBI notifies, not exceeding 40%.
Until 2007 the Act also set a floor of 25%. The Banking Regulation (Amendment) Act, 2007, in force from 23 January 2007, removed the floor and kept the 40% ceiling. The RBI held the SLR at 25% until November 2008 and has cut it, step by step, to 18% since.
What counts as SLR assets
SLR assets are held by the bank itself, not deposited with the RBI. Under the 2025 Directions they are:
- cash, including balances with the RBI in excess of the CRR;
- gold, valued at no more than its current market price;
- unencumbered approved securities: Government of India dated securities, Treasury Bills, state development loans and other instruments the RBI notifies;
- balances under the Standing Deposit Facility (SDF).
Unencumbered means not already pledged. A security lent out in a repo, or pledged as collateral elsewhere, cannot count. The exception is securities a bank borrows against under the MSF within the permitted limit or under FALLCR (below). Those are still treated as part of its SLR.
Note the asymmetry with the SDF: SDF balances count for SLR but not for CRR. Only balances in a bank's current account with the RBI count for CRR.
Daily maintenance and penalties
Unlike the CRR, the SLR has no averaging. A bank must meet it at the close of business every day, on its DTL as of the last day of the second preceding fortnight, and reports it monthly. If it falls short, Section 24(4) sets penal interest at 3% above the Bank Rate on the shortfall for that day and 5% above for each following day the default continues.
Why the SLR exists
The SLR has three jobs, and their balance has shifted over time:
- Solvency and liquidity. Banks always have assets they can sell or borrow against.
- Government borrowing. The SLR creates a captive buyer for government bonds. Banks are among the largest holders of central and state government securities, and SLR rules are a big reason why.
- Monetary control. A higher SLR leaves less for private credit. This was its main use in the 1970s and 1980s. Today the RBI hardly uses the SLR for monetary policy; it has not changed since April 2020.
SLR, LCR and FALLCR
Two rules for the same buffer
Since 2015 Indian banks have also followed the Basel III Liquidity Coverage Ratio (LCR). It requires a bank to hold high-quality liquid assets (HQLA) at least equal to its expected net cash outflows over a 30-day stress period. Government securities are the main HQLA.
This creates an overlap. If SLR securities could never be sold because the SLR had to be met every day, they would not be truly "liquid" in a stress. So the RBI lets banks count part of their mandatory SLR holdings as Level 1 HQLA:
- securities that can be used under the MSF: 2% of NDTL; and
- securities under the Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR): 16% of NDTL.
The total carve-out is 18% of NDTL, which equals the whole SLR. The FALLCR limit was raised from 15% to 16% when the MSF window went back from 3% to 2% of NDTL from January 2022, so that the total stayed at 18%.
What it means
In a liquidity stress, a bank can borrow from the RBI against SLR securities up to these limits, even if that takes it below the SLR. The SLR thus works more and more as a liquidity buffer that can be used in a crisis, and less as a fixed amount locked in bonds. This is why the argument for cutting the SLR further rests on the LCR: banks already have to hold a large stock of government bonds for the LCR, whatever the SLR says.
The history of CRR and SLR
The years of high pre-emption
In the 1970s and 1980s, the CRR and SLR were raised repeatedly to fund the government and control money growth. The RBI's chronology records that by mid-1985 the two together took more than 45% of banks' resources. On 1 July 1989 the CRR was raised to 15%, taking statutory pre-emptions above 53%. On 22 September 1990 the SLR reached its peak of 38.5%. In addition, in the early 1990s the RBI imposed extra reserve requirements on incremental NDTL, such as an additional SLR of 30% on increases in NDTL over the level of 3 April 1992.
The CRR stayed at 15% from July 1989 until April 1993, when it was cut to 14.5%. It went back to 15% in August 1994 before falling steadily in the late 1990s.
The Narasimham Committee
The Committee on the Financial System, chaired by M. Narasimham, reported in November 1991. It argued that the high CRR and SLR locked up bank funds for the government, cut bank profits and left too little for productive lending. It recommended phased reductions in both. The government set a target of bringing the SLR to 25%. The SLR fell from 38.5% to 31.5% by October 1994 and to 25% from 25 October 1997, which was then the statutory floor.
SLR since 2008
After eleven years at 25%, the SLR was cut to 24% in November 2008. It moved to 25% and back in 2009–10, then fell steadily. From January 2019 the RBI cut it by 25 bp a quarter until it reached 18% from 11 April 2020. It has stayed there.
| Effective date | SLR | Effective date | SLR |
|---|---|---|---|
| 22 September 1990 | 38.5% (peak) | 7 February 2015 | 21.5% |
| 29 October 1994 | 31.5% | 24 June 2017 | 20.0% |
| 25 October 1997 | 25.0% | 14 October 2017 | 19.5% |
| 8 November 2008 | 24.0% | 5 January 2019 | 19.25% |
| 11 August 2012 | 23.0% | 4 January 2020 | 18.25% |
| 9 August 2014 | 22.0% | 11 April 2020 | 18.0% |
CRR since 2007
The CRR is used far more actively than the SLR. Its moves since 2007 are:
| Effective date | CRR | Effective date | CRR |
|---|---|---|---|
| 30 August 2008 | 9.00% (peak since 2007) | 22 May 2021 | 4.00% |
| 17 January 2009 | 5.00% | 21 May 2022 | 4.50% |
| 24 April 2010 | 6.00% | 14 December 2024 | 4.25% |
| 9 February 2013 | 4.00% | 28 December 2024 | 4.00% |
| 28 March 2020 | 3.00% | 6 September 2025 | 3.75% |
| 27 March 2021 | 3.50% | 29 November 2025 | 3.00% |
The 2020 cut was announced as a one-year measure. The CRR was restored in two steps in 2021, raised in May 2022 at the start of the hiking cycle, and cut again in 2024–25.
CRR versus SLR
| CRR | SLR | |
|---|---|---|
| Law | Section 42(1), RBI Act, 1934 | Section 24, Banking Regulation Act, 1949 |
| Applies to | Scheduled banks (others under Section 18, BR Act) | All banks |
| Rate now | 3.00% of NDTL | 18.00% of NDTL |
| Where it is held | Current account balance with the RBI | With the bank itself |
| Form | Cash only | Cash, gold, unencumbered approved securities, SDF balances |
| Interest | None since 31 March 2007 | Securities earn their coupon |
| Limits in law | None since 2007 | Up to 40%; 25% floor removed in 2007 |
| Maintenance | Fortnightly average, with a daily minimum of 99% | Every day |
| Penalty | 3% above Bank Rate, rising to 5% above | 3% above Bank Rate, rising to 5% above |
| Main use today | Durable liquidity and cost of funds | Liquidity buffer, overlaps with LCR |
| Last change | 3% from 29 November 2025 | 18% from 11 April 2020 |
The debate over pre-emptions
Reserve requirements are an old argument in Indian banking, and both sides still have a case.
For lower ratios. CRR balances earn nothing, so a high CRR raises banks' costs and lending rates. A high SLR forces banks to lend to the government at market rates, which crowds out private credit and hides the true cost of government borrowing. This was the Narasimham Committee's core argument in 1991, and it explains why combined pre-emption fell from over 53% in 1989 to 21% today.
For keeping them. The CRR gives the RBI a direct lever on durable liquidity, as the 2016 and 2023 incremental CRRs showed, and a predictable demand for reserves that helps it manage the overnight rate. The SLR gives banks a buffer that the LCR now builds on. Many central banks, such as the US Federal Reserve, have cut reserve requirements to zero, but India still uses the CRR actively.
Common exam traps
CRR is a quantity, not a rate of interest. "CRR 3%" means 3% of NDTL is kept with the RBI, not that the RBI pays or charges 3%.
Daily minimum vs CRR. The October 2026 change raised the share of the CRR kept every day from 90% to 99%. It did not raise the CRR to 99% or change the 3%.
Where the money sits. CRR is held with the RBI. SLR assets are held by the bank itself.
SDF balances. They count for SLR, not for CRR.
Who sets them. The RBI sets CRR and SLR. The MPC sets only the repo rate.
Laws. CRR: Section 42, RBI Act. SLR: Section 24, BR Act. Penal rates for both are linked to the Bank Rate.
Peaks. CRR 15% (from 1 July 1989). SLR 38.5% (from 22 September 1990).
Incremental CRR. 2016: 100% on increased NDTL, linked to demonetisation. 2023: 10%, linked to the ₹2,000 note withdrawal.
Key facts at a glance
| CRR (24 October 2026) | 3.00% of NDTL, from the fortnight beginning 29 November 2025 |
| SLR (24 October 2026) | 18.00% of NDTL, from 11 April 2020 |
| CRR legal basis | Section 42(1), RBI Act, 1934 (scheduled banks) |
| SLR legal basis | Section 24, Banking Regulation Act, 1949 |
| CRR floor and ceiling | 3% and 20% removed from 1 April 2007 (RBI Amendment Act, 2006) |
| SLR limits | Ceiling of 40%; 25% floor removed from 23 January 2007 |
| Interest on CRR | None since fortnight beginning 31 March 2007 |
| Daily CRR minimum | 99% of requirement, from 16 October 2026 (was 90%) |
| Reporting fortnight | 1st–15th and 16th–end of month, from 15 December 2025 |
| Penal interest | 3% above Bank Rate (8.75%), then 5% above (10.75%) |
| 2025 CRR cut | 100 bp in four tranches, about ₹2.5 lakh crore released |
| Incremental CRR | 100% (Nov–Dec 2016); 10% (Aug–Oct 2023) |
| FALLCR | 16% of NDTL; with MSF's 2%, 18% of NDTL counts as HQLA |
| Historical peaks | CRR 15% (July 1989); SLR 38.5% (September 1990) |
Exam corner: what to remember
- NDTL = DTL to others + net inter-bank liabilities. Both CRR and SLR are percentages of it, using NDTL as of the last day of the second preceding fortnight.
- CRR 3%, held with the RBI, earns no interest, under Section 42(1) of the RBI Act. SLR 18%, held by the bank in cash, gold, approved securities and SDF balances, under Section 24 of the BR Act.
- The CRR is a fortnightly average with a daily minimum of 99% since 16 October 2026. The SLR must be met every day.
- Penal interest: Bank Rate + 3%, rising to Bank Rate + 5%.
- The 2025 cut: announced 6 June 2025, four 25 bp tranches from 6 September to 29 November 2025, about ₹2.5 lakh crore released.
- Liquidity released = change in CRR × NDTL. 100 bp on about ₹250 lakh crore = ₹2.5 lakh crore.
- Incremental CRR: 100% in November 2016, withdrawn from 10 December 2016; 10% in August 2023, released in three steps by 7 October 2023.
- FALLCR 16% + MSF 2% = 18% of NDTL counts as Level 1 HQLA for the LCR.
- Peaks: CRR 15% (1989) and SLR 38.5% (1990). The Narasimham Committee (1991) pushed for phased cuts; SLR reached 25% in October 1997.
- Fortnights now run 1st–15th and 16th–end of month, under the Banking Laws (Amendment) Act, 2025.
For exam-specific syllabus and pattern details, see our pages for RBI Grade B, SBI PO and IBPS PO.
Test yourself
With effect from the fortnight beginning 16 October 2026, scheduled banks must maintain on every day at least what share of their required CRR?
Show answer
Answer: (c) The RBI's notification of 9 October 2026 raised the daily minimum from 90% to 99%; the CRR stayed at 3%.
The SLR is prescribed under:
Show answer
Answer: (b) Section 24 of the BR Act empowers the RBI to set the SLR up to 40% of DTL; Section 42 covers the CRR.
Which of these does NOT count towards a bank's CRR?
Show answer
Answer: (b) SDF balances count for SLR but not for CRR; only current account balances with the RBI count for CRR.
A bank has NDTL of ₹4,00,000 crore. If the CRR is cut from 4% to 3%, how much is released?
Show answer
Answer: (c) ₹4,00,000 crore × 1% = ₹4,000 crore; required CRR falls from ₹16,000 crore to ₹12,000 crore.
The 2023 incremental CRR of 10% applied to the increase in NDTL between:
Show answer
Answer: (b) It applied from the fortnight beginning 12 August 2023 and was released in three steps by 7 October 2023.
With the Bank Rate at 5.75%, a bank's fortnightly average CRR balance falls short for the first time. The penal rate on the shortfall is:
Show answer
Answer: (b) Section 42(3) sets penal interest at 3% above the Bank Rate, rising to 5% above (10.75%) if the shortfall continues.
Under the RBI's announcement of 6 June 2025, the CRR was cut to 3% in four tranches. The last tranche took effect from the fortnight beginning:
Show answer
Answer: (d) The tranches took effect on 6 September, 4 October, 1 November and 29 November 2025, releasing about ₹2.5 lakh crore.
The SLR reached its all-time peak of 38.5% in:
Show answer
Answer: (c) It became 38.5% from 22 September 1990; the CRR had reached its peak of 15% on 1 July 1989.
Under FALLCR and the MSF together, what share of NDTL held in SLR securities can banks count as Level 1 HQLA for the LCR?
Show answer
Answer: (d) FALLCR allows 16% of NDTL and the MSF 2%, a total of 18%, equal to the whole SLR.
A bank must keep a CRR of ₹2,000 crore for a fortnight. Under the daily minimum of 99%, the lowest balance it may hold on any day is:
Show answer
Answer: (b) 99% of ₹2,000 crore is ₹1,980 crore; under the old 90% rule it was ₹1,800 crore, and the fortnight's average must still be ₹2,000 crore.
Further reading
- RBI (Commercial Banks – CRR and SLR) Directions, 2025: the current rulebook, updated to 9 October 2026, with NDTL rules, exemptions, eligible SLR assets and penalties.
- Handbook of Statistics on the Indian Economy: Major Monetary Policy Rates and Reserve Requirements: every CRR and SLR change since 2007, with the legal basis of each.
- RBI table of Bank Rate, CRR and SLR changes since 1935: the long history, including the 1989 and 1990 peaks and the incremental requirements of the early 1990s.
- RBI History: Chronology 1985 to 1991: short entries on how pre-emption passed 45% and then 53% of bank resources.
- Governor's Statement, 6 June 2025: the RBI's own reasoning for the 100 bp CRR cut and its tranches.
- Report of the Internal Working Group to Review the Liquidity Management Framework (RBI, 2025): how CRR fits into liquidity management today, including the daily maintenance rule.
- Duvvuri Subbarao, Who Moved My Interest Rate? (Penguin, 2016): the Governor who cut the CRR from 9% to 5% in 2008–09 explains how reserve requirements were used in a crisis.
Sources
- RBI notification, Change in the daily minimum CRR maintenance requirement, 9 October 2026 (RBI/2026-27/290): daily minimum raised from 90% to 99% under Section 42(1), from the fortnight beginning 16 October 2026 (accessed 24 October 2026)
- Sanskriti IAS, October 2026: context for the 99% rule, with the CRR unchanged at 3% and the averaging rule kept (accessed 24 October 2026)
- RBI, Governor's Statement, 7 October 2026: average daily surplus of ₹5.9 lakh crore since the August policy; net non-resident deposit inflows of US$119.2 billion in April–August 2026; FCNR(B) mobilisation (accessed 24 October 2026)
- Corporate Law Updates, June 2026: CRR and SLR exemption for fresh 3–5 year US dollar FCNR(B) deposits, 8 June to 30 September 2026, notifications RBI/2026-27/102 to 106 (accessed 24 October 2026)
- TaxGuru, RBI (Commercial Banks – CRR and SLR) Amendment Directions, 2025: amendment of 11 December 2025; Banking Laws (Amendment) Act, 2025; new fortnight of 1st–15th and 16th–end of month from 15 December 2025; NDTL basis (accessed 24 October 2026)
- RBI, Master Directions page, CRR and SLR Directions, 2025: directions issued 28 November 2025, updated to 9 October 2026 (accessed 24 October 2026)
- Mondaq, RBI's CRR and SLR compliance guide: summary of the 2025 Directions: NDTL, CRR exemptions, no interest, penalties, eligible SLR assets, SDF treatment, MSF and FALLCR (accessed 24 October 2026)
- RBI notification on maintenance of CRR, 6 June 2025: CRR tranches of 3.75%, 3.50%, 3.25% and 3.00% from 6 September, 4 October, 1 November and 29 November 2025 (accessed 24 October 2026)
- RBI, Governor's Statement, 6 June 2025: 100 bp CRR cut in four tranches, about ₹2.5 lakh crore of primary liquidity, cost of funding and transmission (accessed 24 October 2026)
- RBI, Handbook of Statistics, Major Monetary Policy Rates and Reserve Requirements: all CRR changes from January 2007 and SLR changes from November 2008; legal basis of CRR and SLR; MSF limit (accessed 24 October 2026)
- RBI, Bank Rate, CRR and SLR changes: SLR changes from 1964 to 1997 including 38.5% from 22 September 1990 and 25% from 25 October 1997; CRR 15% from 1 July 1989, 14.5% from 17 April 1993 and 15% from 6 August 1994; additional SLR on incremental NDTL in 1992 (accessed 24 October 2026)
- RBI History, Chronology 1985 to 1991: pre-emption above 45% in mid-1985; CRR raised to 15% on 1 July 1989, taking pre-emption above 53% (accessed 24 October 2026)
- Business Standard, 27 March 2020: CRR cut by 100 bp to 3% for one year, releasing ₹1.37 lakh crore; daily minimum cut to 80% (accessed 24 October 2026)
- Outlook Business, May 2022: CRR raised 50 bp to 4.5% from 21 May 2022, absorbing about ₹87,000 crore (accessed 24 October 2026)
- Business Standard, 6 December 2024: CRR cut 50 bp to 4% in two tranches from 14 and 28 December 2024, releasing about ₹1.16 lakh crore (accessed 24 October 2026)
- RBI press release, RBI withdraws the incremental CRR, 7 December 2016: 100% I-CRR on the increase in NDTL between 16 September and 11 November 2016, from 26 November; withdrawn from 10 December 2016; MSS ceiling raised to ₹6,000 billion (accessed 24 October 2026)
- Business Standard, 26 November 2016: deposit increase of about ₹3.24 lakh crore in the I-CRR window (accessed 24 October 2026)
- Business Standard, 11 August 2023: 10% I-CRR on the increase in NDTL between 19 May and 28 July 2023, from the fortnight beginning 12 August; about ₹1 lakh crore (accessed 24 October 2026)
- News On AIR, 8 September 2023: I-CRR discontinued in phases; 25% released on 9 September, 25% on 23 September and 50% on 7 October 2023 (accessed 24 October 2026)
- RBI press release, RBI (Amendment) Act, 2006: provisions relating to CRR: Section 3 in force from 1 April 2007; 3% floor and 20% ceiling removed; Section 42(1B) omitted; no interest on CRR balances from the fortnight beginning 31 March 2007 (accessed 24 October 2026)
- RBI circular to state co-operative banks, 2 March 2007: interest rates on eligible CRR balances in 2006–07 before the omission (accessed 24 October 2026)
- The Banking Regulation (Amendment) Act, 2007 (PRS): Section 24(2A) amended to "not exceeding forty per cent", in force from 23 January 2007 (accessed 24 October 2026)
- RBI circular, Maintenance of SLR, 2008: SLR kept at 25% after the 2007 amendment (accessed 24 October 2026)
- Arthapedia (Indian Economic Service), Cash Reserve Ratio: daily minimum of 70% from 28 December 2002, 99% from 27 July 2013, 95% from 21 September 2013 and 90% from 16 April 2016 (accessed 24 October 2026)
- RBI circular, Basel III Framework on Liquidity Standards – LCR (FALLCR): FALLCR raised to 16% of NDTL after the MSF limit returned to 2% from 1 January 2022, keeping the total carve-out at 18% (accessed 24 October 2026)
- RBI, Reserve Bank of India Act, 1934: Sections 42(1), 42(3) and 42(5) (accessed 24 October 2026)
- RBI website home page, Current Rates: CRR 3.00%, SLR 18.00%, Bank Rate 5.75% (accessed 24 October 2026)