What changed
The CRR requirement is reduced from 4.5% to 4.25% effective the fortnight starting December 14, 2024, and further to 4.0% effective the fortnight starting December 28, 2024. This is a 50 bps total reduction, implemented in two equal steps.
What it means for you
Banks will need to hold less cash with RBI, releasing approximately ₹1.16 lakh crore into the banking system. This improves liquidity, potentially lowering short-term rates and easing funding costs for lenders.
What you must do
- Recalibrate daily CRR maintenance for the fortnight beginning December 14 at 4.25% of NDTL.
- Prepare for the second tranche to 4.0% from December 28 and adjust liquidity management accordingly.
- Update internal systems and reporting templates to reflect the new CRR rates.
- Communicate the changes to treasury and ALM teams to optimize deployment of freed-up funds.
Who it affects
All scheduled commercial banks, Treasury and ALM departments, Liquidity management teams
When does the first CRR reduction take effect?
The first reduction to 4.25% applies from the reporting fortnight beginning December 14, 2024.
What is the final CRR rate after both tranches?
The CRR will be 4.0% of NDTL effective from the fortnight beginning December 28, 2024.
Does this apply to all banks?
Yes, the circular applies to all banks covered under Section 42 of the RBI Act and Section 18 of the Banking Regulation Act.