Upping of daily CRR maintenance requirement could lead to small dilution in banks’ interest margins: Jefferies
2 min read
[Key Takeaways
- RBI raised the daily Cash Reserve Ratio (CRR) maintenance requirement from 90% to 99% within the existing 3% CRR framework, signaling calibrated tightening.
- Jefferies estimates the move could withdraw ₹40,000–80,000 crore of liquidity and add 1–2 basis points to banks’ cost of funds.
- Banks’ net interest margins face modest dilution, with potential pass-through to borrowers.
RBI has raised the daily CRR from 90% to 99%
| Photo Credit:
Andrii Yalanskyi
The Reserve Bank of India (RBI) has increased the daily Cash Reserve Ratio (CRR) maintenance requirement from 90 per cent to 99 per cent within the prevailing CRR norm of 3 per cent of net demand and time liabilities. The adjustment, aligned with the Monetary Policy Committee’s shift to a “calibrated tightening” stance, is expected to marginally compress banks’ net interest margins (NIMs), a cost pressure lenders may transfer to borrowers.
“In line with the change in MPC stance to ‘calibrated tightening’, RBI raised daily CRR from 90 per cent to 99 per cent.
Liquidity Impact Assessment
“At 100 per cent CRR, banks would carry ₹8 lakh crore in CRR, and if this lifts balances by 5–10 per cent, it can withdraw ₹40,000–80,000 crore of liquidity and add 1–2 basis points to cost of funds,” said Jefferies India equity analysts Prakhar Sharma and Vinayak Agarwal.
Jefferies India Pvt Ltd is licensed by the Securities and Exchange Board of India as a stock broker, research analyst, and merchant banker.
Published on October 12, 2026
What is the new daily CRR maintenance requirement?
The RBI has raised the daily CRR maintenance requirement from 90% to 99% within the existing 3% CRR norm on net demand and time liabilities.
How much liquidity could be withdrawn from the banking system?
Jefferies estimates the measure could withdraw ₹40,000–80,000 crore of liquidity, assuming CRR balances increase by 5–10% toward the ₹8 lakh crore total at 100% maintenance.
What is the projected impact on banks’ cost of funds?
The brokerage estimates a 1–2 basis point increase in banks’ cost of funds resulting from the higher maintenance requirement.
How will this affect net interest margins?
Net interest margins face modest dilution. Analysts indicate banks may pass the incremental cost to borrowers through lending rate adjustments.
When was this regulatory change announced?
The change was published on October 12, 2026, coinciding with the MPC’s shift to a “calibrated tightening” policy stance.
