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CRR Restoration: Two-Phase Hike to 4% by May 2021

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2020-21/90 · issued 05 Feb 2021 · ~1 min read
Quick answerRBI will restore CRR from 3% to 4% in two steps: 3.5% from March 27, 2021, and 4% from May 22, 2021. This reverses the 100 bps cut given in March 2020, gradually absorbing liquidity without disrupting markets.

What changed

The CRR, which was reduced by 100 bps to 3% of NDTL for one year from March 28, 2020, will now be restored in two phases. Effective from the fortnight starting March 27, 2021, CRR rises to 3.5%, and from the fortnight beginning May 22, 2021, it goes to 4%.

What it means for you

Banks will need to set aside more funds as reserves, reducing lendable resources and putting mild pressure on net interest margins. The phased approach gives banks time to adjust liquidity management. This signals RBI's confidence that the worst of the pandemic stress is over and normalisation is underway.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All scheduled commercial banks, Treasury and ALM desks, Lending and credit teams

❓ Common questions

Regulatory timeline

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

Why is RBI restoring CRR now?

The 100 bps cut was a temporary COVID relief for one year ending March 26, 2021. RBI decided to gradually restore it in two phases to avoid market disruption, as announced in the February 5, 2021 policy statement.

What is the exact timeline for the CRR hike?

CRR goes to 3.5% of NDTL from the reporting fortnight starting March 27, 2021, and to 4% from the fortnight beginning May 22, 2021.

Does this affect all banks uniformly?

Yes, the CRR requirement applies to all scheduled banks as per Section 42 of the RBI Act, 1934 and Section 18 of the Banking Regulation Act, 1949.

📜 Read the original circular — full text as issued by RBI
RBI/2020-21/90 DOR.No.Ret.BC.35/12.01.001/2020-21 February 5, 2021 All Banks Dear Sir / Madam Maintenance of Cash Reserve Ratio (CRR) Please refer to our Circular DOR.No.Ret.BC.49/12.01.001/2019-20 dated March 27, 2020 , on the captioned subject. The cash reserve ratio (CRR) of all banks was reduced by 100 basis points to 3.00 per cent of their Net Demand and Time liabilities (NDTL) effective from the reporting fortnight beginning March 28, 2020. The dispensation was available for a period of one year ending March 26, 2021. 2. As announced in paragraph 2 of the Statement on Developmental and Regulatory Policies dated February 05, 2021 , it has been decided to gradually restore the CRR in two phases in a non-disruptive manner. Accordingly, banks are required to maintain the CRR at 3.50 per cent of their NDTL effective from the reporting fortnight beginning March 27, 2021 and 4.00 per cent of their NDTL effective from fortnight beginning May 22, 2021. 3. A copy of the relative notification DOR.No.Ret.BC.38/12.01.001/2020-21 dated February 05, 2021 is enclosed . Yours faithfully (Thomas Mathew) Chief General Manager Encls: as above DOR.No.Ret.BC.38/12.01.001/2020-21 February 05, 2021 Notification In exercise of the powers conferred under the sub-section (1) of Section 42 of the Reserve Bank Act, 1934 and sub-section (1) of Section 18 of the Banking Regulation Act, 1949 (10 of 1949), and in partial modification of the earlier notification DOR.No.Ret.BC.50/12.01.001/2019-20 dated March 27, 2020 , the Reserve Bank of India hereby notifies that the average Cash Reserve Ratio (CRR) required to be maintained by every bank shall be 3.50 per cent of its net demand and time liabilities effective from the reporting fortnight beginning March 27, 2021 and 4.00 per cent of net demand and time liabilities effective from fortnight beginning May 22, 2021. (J.K.Dash) Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/90 · issued 05 Feb 2021. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12020&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.
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