The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Third Amendment Directions, 2026, introducing a temporary regulatory exemption for certain Non-Resident (External) Rupee (NRE) term deposits. The amendment, which comes into force with immediate effect, aims to encourage banks to mobilise longer-tenor NRE deposits and strengthen foreign currency inflows into the banking system.
Under the amendment, fresh NRE term deposits with a minimum tenor of three years, including deposits renewed upon maturity, mobilised by banks between June 19, 2026, and September 30, 2026, will be exempt from the maintenance of both the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR). This relief applies only to the original deposit amounts and remains available for as long as the deposits continue to be held in the books of the bank.
The CRR exemption will become effective from the reporting fortnight beginning July 16, 2026, based on the Net Demand and Time Liabilities (NDTL) computation as of June 30, 2026, and will continue for subsequent reporting fortnights. The RBI has clarified that transfers of funds from Non-Resident (Ordinary) (NRO) accounts to NRE accounts will not qualify for this exemption, thereby ensuring that the benefit is limited to genuinely fresh NRE deposits.
To operationalise the policy, the RBI has amended the Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025. A new sub-paragraph 20(9) has been inserted to specify the eligibility conditions and operational framework for the exemption. Consequential amendments have also been made to paragraph 29(5), extending the reporting provisions to include the newly inserted paragraph 20(9).
Further, the RBI has revised Annex A to Form A by renumbering the existing item VIII.8 as VIII.9 and inserting a new reporting item titled “NRE Term Deposits – 2026 [para 20(9)]”. This change will enable banks to separately disclose eligible NRE deposits benefiting from the exemption.
Issued under the powers conferred by the Banking Regulation Act, 1949, and the Reserve Bank of India Act, 1934, the amendment reflects the RBI’s continued efforts to support foreign currency inflows while providing temporary regulatory relief to banks. The measure is expected to encourage mobilisation of stable, long-term NRE deposits and enhance liquidity within the banking sector.
