RBI exempts banks from maintaining statutory reserve ratios on fresh NRE term deposits

FILE PHOTO: The Reserve Bank of India (RBI) logo outside its Mumbai headquarters, November 2, 2010. REUTERS/Danish Siddiqui/File Photo | Photo Credit:
DANISH SIDDIQUI

The Reserve Bank of India has waived the statutory reserve requirement for newly‑accepted Non‑Resident (External) Rupee (NRE) term deposits of three years or longer that banks raise between June 19 2026 and September 30 2026, as part of a temporary scheme to draw foreign funds.

The RBI has already waived the reserve requirement on fresh 3‑5‑year Foreign Currency Non‑Resident (Bank) – FCNR (B) deposits, covering both the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR).

Because banks will no longer need to set aside the CRR (currently 3 % of deposits) and SLR (currently 18 % of deposits) on these deposits, they can lend out the entire amount, which may allow them to offer higher interest rates.

Previously, for every ₹100 of deposits a bank could lend only about ₹79, with ₹3 held as CRR with the RBI and ₹21 invested in government securities. With the waiver of both ratios, banks can now lend the full deposit amount.

Fresh NRE term deposits

The RBI said that fresh NRE term deposits of three years or more, including renewals at maturity, collected by banks from June 19 2026 through September 30 2026 are exempt from CRR maintenance starting with the reporting fortnight that begins July 16 2026 (based on the net demand and time liability figure as of June 30 2026) and for each subsequent fortnight.

The reserve‑ratio exemption applies only to the original deposit amount while it remains on the bank’s books. Moving funds from a Non‑Resident (Ordinary) (NRO) account to an NRE account does not make the deposit eligible for the exemption.

Published on June 19 2026