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Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)

Reserve Bank of India (RBI) has issued the directions on maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) by banks.

To whom are the directions applicable?

The directions are applicable to the following Regulated Entities (REs) –

  • Commercial Banks 
  • Small Finance Banks (SFBs)
  • Payments Banks (PBs)
  • Local Area Banks (LABs)
  • Regional Rural Banks (RRBs)
  • Primary (Urban) Co-operative Banks (UCBs)
  • Rural Co-operative Banks –
    • State Co-operative Banks (StCBs)
    • District Central Co-operative Banks (DCCBs)

What is CRR?

Every bank shall maintain in India by way of cash reserve, a sum equivalent to such percent of its Net Demand and Time Liabilities (NDTL) in India, as the RBI in terms of Section 42(1) of the RBI Act, 1934 (for scheduled banks) and Section 18(1) of the Banking Regulation Act (BR Act), 1949 (for non-scheduled banks) [including provisions of Section 18(1) of the BR Act as applicable to co-operative banks], may specify.

What is incremental CRR?

In terms of Section 42(1A) of the RBI Act, 1934, the RBI may require the scheduled banks to maintain, in addition to the balances prescribed under Section 42(1) of the Act, an additional average daily balance.

How much CRR is to be maintained by banks?

  • Every scheduled bank shall maintain in India with the RBI, an average daily balance of not less than 3.75%, 3.5%, 3.25% and 3% of its NDTL, as on the last day of the second preceding fortnight, effective from the reporting fortnight beginning September 6, October 4, November 1 and November 29, 2025, respectively. 
  • LABs shall maintain the CRR at the above rates, by way of cash reserve with itself or by way of balance in a current account with the RBI, or by way of net balance in current accounts or in one or more of the aforesaid ways.
  • Non-scheduled co-operative bank shall maintain the CRR at the above rates, by way of cash reserve with itself; or by way of balance in current account with the RBI or the StCB of the State concerned; or by way of net balance in current accounts; or in case of UCBs, balances with DCCB of the district concerned; or in one or more of the aforesaid ways.
  • Every scheduled bank shall maintain minimum CRR of not less than 90% of the required CRR on all days during the reporting fortnight, in such a manner that the average of CRR maintained daily shall not be less than the CRR prescribed by the RBI.

What is a fortnight for the purpose of CRR and SLR?

Fortnight means the period from the 1st day to the 15th day of each calendar month or 16th day to the last day of each calendar month, both days inclusive.

Do banks earn interest on CRR balances?

The RBI does not pay any interest on the CRR balances maintained with the RBI.

What are the reporting timelines for CRR?

  • Under Section 42(2) of the RBI Act, 1934, scheduled banks shall submit to the RBI a Return in Form A / Form B (as applicable), at the close of business on last day of each fortnight within 5 days after the date of the relevant fortnight to which it relates.
  • Non-scheduled co-operative banks shall submit a Return in Form I to the regional office concerned of the RBI, within 20 days after the end of the month to which it relates.
  • Where such day is a public holiday under the Negotiable Instruments Act, 1881, for one or more offices of the bank, the Return shall give the preceding working day’s figure in respect of such office or offices, but shall nevertheless be deemed to relate to last day of such fortnight.
  • Failure to submit the Return / late submission of the Return shall attract the provisions of Section 42(4) of the RBI Act, 1934 (for scheduled banks) or Section 46(4) of the BR Act, 1949 (for non-scheduled co-operative banks) and banks are liable for imposition of penalties as indicated therein.

What if banks fail to maintain the requisite CRR?

  • If the daily balance of CRR held by the scheduled bank during any fortnight is below the minimum prescribed, the scheduled bank is liable to pay to the RBI, penal interest @ (3% p.a. + Bank Rate) on the shortfall amount for that day and if the shortfall continues on the next succeeding days, penal interest shall be recovered @ (5% p.a. + Bank Rate).
  • In cases of shortfall in maintenance of CRR on average basis during a fortnight, penal interest will be recovered as envisaged in Section 42(3) of the RBI Act, 1934.
  • Under the provisions of Section 42(3A) of the RBI Act, 1934, penal interest at the increased rate of 5% p.a. + Bank Rate becomes payable and if the default still continues during the next succeeding fortnight –
    • Every Director / Manager / Secretary of the scheduled bank who is knowingly and willfully a party to the default, shall be punishable with fine up to ₹500 and with a further fine up to ₹500 for each subsequent fortnight during which default continues.
    • RBI may prohibit the scheduled bank from receiving any fresh deposit after the said fortnight, and if default is made by the bank in complying with the prohibition, every director and officer of the bank who is knowingly and willfully a party to such default or who through negligence or otherwise contributes to such default shall be punishable with fine up to ₹500 and with a further fine up to ₹500 for each day on which a deposit received in contravention of such prohibition is retained by the scheduled bank.
  • LABs shall be liable to pay to the RBI, penal interest as envisaged in Section 18(1A) of the BR Act, 1949, if the daily balance of CRR maintained by the banks falls below the prescribed minimum CRR.
  • Non-scheduled co-operative bank shall be liable to pay to the RBI, penal interest as envisaged in Section 18(1A) read with Section 56 of the BR Act, 1949, if the daily balance of CRR maintained by the bank falls below the prescribed minimum CRR.

What is SLR?

In addition to the cash reserves, every bank shall maintain in India SLR assets, the value of which shall not, at the close of business on any day, be less than 18% (SLR can be maximum 40%) of its NDTL in India as on the last day of the second preceding fortnight.

What is Marginal Standing Facility (MSF)?

Banks permitted by the RBI shall have the option to participate in the Marginal Standing Facility (MSF) scheme. The features of the scheme are –

  • Eligible banks can dip up to 2% in their SLR holdings.
  • In such cases, banks shall not have the obligation to seek a specific waiver for default in SLR compliance arising out of use of this facility.

How is SLR to be maintained by banks?

SLR assets shall be maintained by banks as under –

  • Cash
  • Gold
  • Unencumbered investment in any of the following instruments (i.e. SLR securities) –
    • Dated securities of the Government of India 
    • Treasury Bills of the Government of India
    • Cash Management Bill (CMB) 
    • State Government Securities of the respective State Governments 
  • The deposit and unencumbered approved securities required to be made with the RBI by a banking company incorporated outside India
  • Unencumbered investment in approved securities by co-operative banks
  • Any balance maintained by a scheduled bank with the RBI in excess of the balance required to be maintained by it under Section 42 of the RBI Act, 1934
  • SLR securities that have been acquired from the RBI under reverse repo

What are the reporting timelines for SLR?

  • The banks shall submit to the RBI before 20th day of every month, a Return in Form VIII / Form I (as applicable) showing the amount of SLR held on last day of each fortnight during the immediate preceding month or if any such day is a public holiday under the Negotiable Instruments Act, 1881, at the close of business on the preceding working day.
  • Failure to submit the prescribed return in time will attract the provisions of Section 46(4) of the BR Act, 1949.

What if banks fail to maintain the requisite SLR?

  • On the failure of the bank to maintain as on any day, the required amount of SLR, the bank shall be liable to pay to the RBI, the penal interest as envisaged under Section 24 of the BR Act, 1949.
  • Where it is observed that banks are persistently defaulting despite instructions and repeated advice, RBI in addition to levy of penalty on such defaulting banks, may be constrained to consider cancelling the licence in case of licensed banks and refuse licence in case of unlicensed banks under Section 22 of the BR Act, 1949. 

Who has final decision on nature of the transaction?

If any question arises as to whether any transaction shall be regarded as liability in India of a bank, the bank shall approach the RBI. The decision of the RBI thereon shall be final.


References

Reserve Bank of India. (2022, August 29). 'The Reserve Bank of India Act, 1934'. Retrieved from https://www.rbi.org.in/Scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Act

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on June 19, 2026)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13160&Mode=0

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Local Area Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on January 22, 2026)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13081&Mode=0

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Payments Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on January 22, 2026)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13098&Mode=0

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Regional Rural Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on June 19, 2026)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13056&Mode=0

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Rural Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on June 19, 2026)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13005&Mode=0

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on June 19, 2026)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13128&Mode=0

Reserve Bank of India. (2025, November 28). 'Reserve Bank of India (Urban Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on June 19, 2026). Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13031&Mode=0


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