The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025, setting out updated rules for banks’ reserve maintenance, reporting and compliance. These Directions, effective immediately, apply to commercial banks (excluding small finance, local area and payments banks) and detail definitions, computation methods, eligible instruments and penalties related to Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
CRR requirements oblige banks to maintain an average daily balance with the RBI calculated on Net Demand and Time Liabilities (NDTL). The Directions introduce a phased schedule of minimum CRR percentages: 3.75%, 3.5%, 3.25% and 3.0% of NDTL, effective from the reporting fortnights beginning September 6, October 4, November 1 and November 29, 2025 respectively. Banks must also maintain at least 90% of the required CRR on each day of the reporting fortnight so that the daily average meets the prescribed level. Importantly, the RBI will not pay interest on CRR balances.
Incremental CRR powers under Section 42(1A) remain available to the RBI, allowing additional balances to be required with reference to specified base dates. The Directions clarify computation rules for NDTL, including the treatment of inter-bank items, foreign currency deposits, Upper Tier II instruments, and items excluded from NDTL such as paid-up capital, certain refinance amounts, tax provisions, and specific government/agency receipts.
SLR rules require banks to hold SLR assets at a minimum of 18% of NDTL, with the RBI permitted to set the ceiling up to 40% by notification. Eligible SLR assets include cash, gold and unencumbered government securities (demanded instruments such as dated GOI securities, Treasury Bills and State Development Loans), along with certain balances maintained with the RBI. The Directions specify treatment of encumbered securities, repo transactions, classification and valuation per existing investment guidelines, and permit SLR securities to be counted as Level 1 High Quality Liquid Assets for Liquidity Coverage Ratio calculations to a defined extent.
Reporting requirements remain rigorous: fortnightly Form A returns for CRR and monthly Form VIII returns for SLR, submitted electronically via CIMS with digital signatures. Detailed annexes, memoranda and auditor certifications are mandated; banks must explain material fortnightly fund-flow variations exceeding 20%.
Penalties are set for defaults: penal interest for CRR shortfalls (escalating rates above Bank Rate), fines for willful default by officers, and sanctions including prohibition on fresh deposits. SLR defaults attract penal interest under Section 24 of the BR Act. The Directions repeal earlier CRR/SLR instructions (noted November 28, 2025) but preserve legal effects of prior actions, approvals and ongoing proceedings. The RBI retains authority to clarify interpretations and issue further guidance.
