What changed
RBI has amended the Small Finance Banks (CRR and SLR) Directions, 2025 to insert a new sub-paragraph (7) in paragraph 20. This exempts fresh NRE term deposits of 3 years or more tenor, mobilized between June 19, 2026 and September 30, 2026, from CRR and SLR maintenance. The exemption starts from the reporting fortnight beginning July 16, 2026 and lasts as long as the deposits stay in the bank's books. Transfers from NRO to NRE accounts do not qualify.
What it means for you
Small finance banks can now offer more competitive NRE deposit rates for longer tenors without worrying about the reserve cost, potentially boosting their NRE deposit mobilisation. This frees up funds that would otherwise be locked in CRR and SLR, improving their lendable resources and net interest margins. However, the window is limited to just over three months, so banks need to act quickly to capitalise.
What you must do
- Update your NRE term deposit product sheets and marketing materials to highlight the CRR/SLR exemption for 3-year+ tenors.
- Train treasury and branch staff on the eligibility criteria: only fresh NRE deposits (not NRO transfers) of 3 years or more, mobilized between June 19 and Sep 30, 2026.
- Adjust your ALM and liquidity planning to account for the freed-up reserves from these exempt deposits.
- Monitor the reporting fortnight start date (July 16, 2026) for CRR/SLR computation changes.
Who it affects
Small finance banks, NRE depositors (especially NRIs seeking longer-tenor deposits), Treasury and ALM teams at SFBs
Does this exemption apply to renewals of existing NRE deposits?
Yes, the exemption covers deposits that are renewed upon maturity, provided the renewal happens between June 19 and September 30, 2026 and the renewed tenor is 3 years or more.
Are NRO to NRE transfers eligible for this CRR/SLR relief?
No. The notification explicitly states that any transfer from Non-Resident (Ordinary) (NRO) accounts to NRE accounts will not qualify for the exemption.
When does the CRR/SLR exemption actually take effect for these deposits?
The exemption applies from the reporting fortnight beginning July 16, 2026, which is based on the NDTL computation as on June 30, 2026. So deposits mobilized before that date will still see the benefit from that fortnight onward.