Home › Circulars › RBI/2006-2007/331

CRR Floor Removed, RBI Gains Full Flexibility

Current · Source: Reserve Bank of India · RBI/2006-2007/331 · issued FY 2006-07 · ~2 min read

Quick answerRBI removed the statutory 3% CRR floor effective April 1, 2007, giving itself full discretion to set CRR without any ceiling or floor. Banks must continue maintaining CRR at 6.25% from April 14 and 6.50% from April 28, 2007, with no interest paid on CRR balances from March 31, 2007.

The rule, in the simplest words

Starting April 1, 2007, RBI (India's central bank) can set the CRR (the portion of deposits banks must keep with RBI) at any level it wants, with no minimum or maximum limit.
Banks must keep 6.25% of their deposits as CRR from April 14, 2007, and 6.50% from April 28, 2007.
From March 31, 2007, RBI will not pay any interest on the CRR money banks keep with it.
The old rule that CRR could not go below 3% of deposits is gone forever.

How it plays out — a real example

A branch operations officer in Indore, Priya, is updating her bank's liquidity plan. She now knows that RBI can raise CRR without any floor, so she tells her treasury team to prepare for possible hikes. Also, since CRR earns no interest from March 31, 2007, she factors in a higher cost for the funds her bank must set aside, making her gold loans slightly more expensive to price.

What changed

The statutory minimum CRR requirement of 3% of net demand and time liabilities was abolished from April 1, 2007, following the Reserve Bank of India (Amendment) Act, 2006 coming into force. RBI can now prescribe CRR for scheduled commercial banks without any floor or ceiling. Additionally, sub-section (1B) of Section 42 of the RBI Act, 1934 was omitted, and RBI stopped paying interest on CRR balances maintained by banks from the fortnight beginning March 31, 2007.

What it means for you

Banks lose the safety of a known CRR floor, exposing them to potentially higher reserve requirements in tightening cycles. The removal of interest on CRR balances increases the effective cost of funds for banks, as maintaining CRR now yields zero return. Lenders must factor in greater CRR volatility in liquidity planning and asset-liability management.

What you must do

Update internal CRR computation systems to reflect removal of the 3% statutory floor and zero interest on CRR balances.
Prepare for potential CRR hikes by stress-testing liquidity buffers and contingency funding plans.
Communicate the change in CRR cost structure to treasury and ALCO teams for revised funding cost estimates.
Monitor RBI circulars closely for future CRR rate changes, as no floor or ceiling now applies.

Who it affects

All scheduled commercial banks (excluding RRBs), Treasury and ALM teams, Compliance and regulatory reporting departments

❓ Common questions

Regulatory timeline

Stated effective date effective April 1, 2007
Decoded by BankPulse 2026-06-19 17:21 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the CRR rate applicable from April 28, 2007?

From the fortnight beginning April 28, 2007, scheduled commercial banks must maintain CRR at 6.50% of net demand and time liabilities.

Will banks receive any interest on CRR balances after this change?

No. With effect from the fortnight beginning March 31, 2007, RBI stopped paying any interest on CRR balances maintained by scheduled commercial banks.

Does RBI now have unlimited power to set CRR?

Yes. With the removal of the 3% statutory floor, RBI can prescribe CRR for scheduled commercial banks at any rate without any floor or ceiling, subject to monetary stability needs.

📜 Read the original circular — full text as issued by RBI

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 12 kb ) Maintenance of Cash Reserve Ratio (CRR) RBI/2006-2007/331 Ref: DBOD.No. Ret.BC.82 /12.01.001/2006-07 &nbsp;April&nbsp; 20, 2007 All Scheduled Commercial Banks (excluding Regional Rural Banks) Dear Sir, Section 42(1) of Reserve Bank of India Act, 1934-Maintenance of Cash Reserve Ratio (CRR) Please refer to our Circulars RBI/2006-2007/269 DBOD.No.Ret.BC.62/12.01.001/2006-2007 dated March 01, 2007 &nbsp; and RBI/2006-2007/305&nbsp; DBOD.No.Ret.BC.74/12.01.001/2006-2007 dated April 04, 2007 on the captioned subject. Government of India in their Extraordinary Gazette notification No.S.O.337(E) dated March 9, 2007 have notified April 01, 2007 as the date on which the provisions of Section 3 of the Reserve Bank of India (Amendment) Act, 2006&nbsp; shall come into force. Consequent upon the provisions of Section 3 of the Reserve Bank of India (Amendment) Act, 2006 coming into force, the amendment carried out to sub-Section (1) of Section 42 of Reserve Bank of India Act, 1934 has been brought into force with effect from April 01,2007. Accordingly, the statutory minimum CRR requirement of 3 per cent of total demand and time liabilities no longer exists with effect from the said notified date. The Reserve Bank of India, having regard to the needs of securing the monetary stability in the country, may from time to time prescribe the CRR for Scheduled Commercial Banks without any floor and ceiling rate. 2. In exercise of the powers conferred on the Reserve Bank of India, it has been decided to continue the status quo on the rate of CRR to be maintained by Scheduled Commercial Banks and the extant exemptions which will be operative till further changes are notified. Accordingly, Scheduled Commercial Banks shall continue to maintain CRR on their total demand and time liabilities, subject to the exemptions as indicated in our circular DBOD.No.Ret.BC.84 /2006-2007 dated April 20, 2007 from the fortnights as detailed below: Effective date (i.e., the fortnight beginning from) CRR on net demand and time liabilities (per cent) April 14, 2007 6.25 April 28, 2007 6.50 3. Further, in view of Section 3 of the Reserve Bank of India (Amendment) Act, 2006 coming into force, sub-section (1B) of Section 42 of the Reserve Bank of India Act, 1934&nbsp; stands omitted with effect from April 01, 2007.&nbsp; Consistent with the amendment and in partial modification of our Circulars RBI/2006-2007/269 DBOD.No.Ret.BC.62/12.01.001/2006-2007 dated March 01, 2007 &nbsp; and RBI/2006-2007/305&nbsp; DBOD.No.Ret.BC.74/12.01.001/2006-2007 dated April 04, 2007 , it has been decided that with effect from the fortnight beginning March 31, 2007, the Reserve Bank of India will not be paying any interest on the CRR balances maintained by Scheduled Commercial Banks. 4. A copy of the relative notification DBOD.No.Ret.83 /12.01.001/2006-2007 dated April 20, 2007 is enclosed. Please acknowledge receipt. Yours faithfully (Malvika Sinha) General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn &copy; Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/331 · issued FY 2006-07. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

💻 IT / Systems

Update internal CRR computation systems to reflect removal of the 3% statutory floor and zero interest on CRR balances.

📜 Compliance

Prepare for potential CRR hikes by stress-testing liquidity buffers and contingency funding plans.
Communicate the change in CRR cost structure to treasury and ALCO teams for revised funding cost estimates.
Monitor RBI circulars closely for future CRR rate changes, as no floor or ceiling now applies.

Grouped from the action items above — a single circular may involve more than one team.

Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Treasury and ALM teams, Compliance and regulatory reporting departments), your first concrete step on “CRR Floor Removed, RBI Gains Full Flexibility” is: “Update internal CRR computation systems to reflect removal of the 3% statutory floor and zero interest on CRR balances.” (RBI issued this FY 2006-07).

Circular: RBI/2006-2007/331 -- CRR Floor Removed, RBI Gains Full Flexibility
Issued: FY 2006-07
Action required: Update internal CRR computation systems to reflect removal of the 3% statutory floor and zero interest on CRR balances.
Action required: Prepare for potential CRR hikes by stress-testing liquidity buffers and contingency funding plans.
Action required: Communicate the change in CRR cost structure to treasury and ALCO teams for revised funding cost estimates.
Action required: Monitor RBI circulars closely for future CRR rate changes, as no floor or ceiling now applies.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

💬 Banker Discussion

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3429&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.