What changed
The CRR for all banks is being reduced from the current level to 3.0% of NDTL, phased in four steps: 3.75% from Sep 6, 3.5% from Oct 4, 3.25% from Nov 1, and 3.0% from Nov 29, 2025. This replaces the earlier CRR requirement set in December 2024.
What it means for you
Banks will have to set aside less cash with RBI, releasing substantial liquidity into the system. This can lower funding costs and improve net interest margins, but also requires careful liquidity management during the transition. Lenders can use the freed funds for credit expansion or investment.
What you must do
- Update your CRR maintenance schedules to reflect the new phased rates from September 6, 2025 onwards.
- Reassess liquidity buffers and treasury strategies to deploy the released funds optimally.
- Communicate the changes to your ALCO and treasury teams for smooth fortnightly compliance.
- Monitor NDTL calculations accurately to avoid penalties during the transition.
Who it affects
All scheduled commercial banks, Treasury and ALM teams, Lending and credit departments
When does the first CRR reduction take effect?
The first tranche of 25 bps reduction, bringing CRR to 3.75%, is effective from the reporting fortnight beginning September 6, 2025.
What is the final CRR rate after all tranches?
After four equal reductions, the CRR will stand at 3.0% of NDTL, effective from the fortnight beginning November 29, 2025.
Does this circular apply to all banks?
Yes, the reduction applies to all banks covered under Section 42 of the RBI Act, 1934 and Section 18 of the Banking Regulation Act, 1949.