RBI phases a 100 bps CRR cut to 3% across four tranches ending November 2025, releasing durable bank liquidity

On June 6, 2025, the Reserve Bank of India announced that it would cut the Cash Reserve Ratio (CRR) of all banks by 100 basis points (bps), from 4.0% to 3.0% of net demand and time liabilities (NDTL). The cut came in four equal tranches of 25 bps each, with the last one taking effect for the reporting fortnight beginning November 29, 2025. This pre-open note, dated October 25, 2026, explains how the schedule worked, what it changed for bank balance sheets, and why the 3.0% CRR still matters to a market that now faces a 5.50% repo rate after the RBI's October 7, 2026 hike.

The legal basis is RBI circular RBI/2025-26/46, reference DoR.RET.REC.23/12.01.001/2025-26, dated June 6, 2025, together with notification DoR.RET.REC.24/12.01.001/2025-26. Both are on the RBI notifications page. The circular partly modifies the RBI's December 6, 2024 notification on CRR and puts into effect the Governor's statement of June 6, 2025. Its stated aim was to inject durable liquidity into the banking system.

Market Snapshot

The RBI source behind this note covers the reserve requirement only. It carries no Nifty 50, Sensex or sectoral index levels, so this note quotes none. Readers who want index closes should use the exchange websites directly; we do not repeat numbers we cannot trace to a primary record. What we can set out exactly is the CRR schedule, which is the baseline every bank has worked from since November 29, 2025.

The four CRR tranches (RBI circular dated June 6, 2025)

The table shows a steady step-down of 25 bps every four weeks. Each tranche date falls 28 days after the last one, which matches the fortnightly reporting cycle banks use for reserve maintenance. Phasing the 100 bps across four dates, rather than releasing it in a single step, spread the extra lendable funds over roughly 12 weeks, from September 6 to November 29, 2025.

Policy rates that sit alongside the 3.0% CRR (as of October 2026)

The pairing is unusual. The CRR was cut to 3.0% to add liquidity. On October 7, 2026, the MPC raised the repo rate by 25 bps to 5.50%, its first increase since February 2023, and moved its stance to "calibrated tightening". So the price of money has gone up while the reserve requirement is still at its post-2025 low.

What Moved Yesterday

Our primary source records no stock or sector moves for the previous session, so this section gives none. What it can do is track how the CRR has moved over time, which is the variable this angle is about. The table below compares the start and end of the 2025 cycle.

The per-Rs 100 crore figures above are our own arithmetic, not RBI data. They show how the ratio works. CRR balances are held with the RBI as cash, and banks earn no interest on them. Each 25 bps tranche therefore freed Rs 25 lakh for every Rs 100 crore of NDTL, and the full 100 bps freed Rs 1 crore per Rs 100 crore. A bank can lend that money out or put it into government securities.

Worked example: a mid-sized bank

Take a hypothetical bank with Rs 2,00,000 crore of NDTL. Under the 4.00% ratio it had to keep Rs 8,000 crore with the RBI. At 3.00% it keeps Rs 6,000 crore. The Rs 2,000 crore difference was released in four lots of Rs 500 crore, on September 6, October 4, November 1 and November 29, 2025. If that Rs 2,000 crore went into government securities instead of sitting idle, it would add to the bank's interest income. That is why the market reads a CRR cut as positive for bank net interest margins. The size of the gain depends on bond yields, which are not part of our source data.

Why phasing mattered

The briefing record states the purpose plainly: durable liquidity. Durable liquidity is permanent, unlike the overnight or term funds the RBI lends at the repo or SDF window. A CRR cut, once in force, stays until the RBI changes the ratio again. Spreading it over four fortnights from September 6, 2025 meant no single settlement date took the whole 100 bps release. That avoided a sudden surplus that could have pushed overnight rates well below the 5.25% SDF floor that applies today.

What to Watch Today

On October 25, 2026, the most useful question is not when the CRR cut happened but whether the 3.0% ratio survives the RBI's change of direction. Four dated items frame the outlook.

1. The next MPC meeting, December 2-4, 2026. The October 7, 2026 statement cited the West Asia conflict, crude-oil volatility, a deficient monsoon, El Nino and firmer core inflation (CPI of 4.8% in August 2026). The RBI raised its FY 2026-27 CPI projection to 5.2%. Watch whether the December statement talks only about the repo rate or also mentions reserve requirements.
2. Loan rate resets. Loans linked to the external benchmark lending rate (EBLR) usually reset within about three months of a repo change. Borrowers can expect the October 7, 2026 hike to show up in their rates by early January 2027. Our home loan EMI calculator shows what a 25 bps rise does to a monthly instalment.
3. Deposit rates. Banks gained Rs 1 crore of deployable funds per Rs 100 crore NDTL from the 2025 CRR cuts, and the policy rate now stands 25 bps higher. Watch whether fixed deposit rates follow the hike. Savers can compare tenures with the FD calculator.
4. Liquidity signals in RBI releases. The RBI's weekly statistical supplement and press releases on rbi.org.in are the primary record for any change in liquidity operations. Our policy is to report a change only once it appears there.

Calendar for the weeks ahead

For equity investors, a CRR change acts on banks before it acts on the index. Banks are the largest sector in most large-cap benchmarks, so a change in reserve rules can move the index through them. Investors who keep a monthly SIP running through a rate cycle can use the SIP calculator to see how investing a fixed sum each month works across 10, 15 or 20 years without trying to time a policy turn. Those putting in a single sum can use the lumpsum calculator. For how rate moves feed through to debt funds, see our glossary entry on bond yield.

What this note does not claim

This note does not forecast whether the RBI will raise the CRR again in December 2026 or later. Neither the June 6, 2025 circular nor the October 7, 2026 MPC statement, as we have them, says anything about a future CRR change. Any claim of that kind would be a guess. The RBI has used the CRR in both directions in the past, and only an RBI notification would change the 3.00% ratio.

FAQ

What is the current Cash Reserve Ratio in India?

The CRR is 3.00% of net demand and time liabilities. It has been at that level since the reporting fortnight that began on November 29, 2025, under RBI circular RBI/2025-26/46 dated June 6, 2025.

How was the 100 bps CRR cut phased in 2025?

It came in four 25 bps tranches. The ratio went to 3.75% from September 6, 3.50% from October 4, 3.25% from November 1 and 3.00% from November 29, 2025.

Why did the RBI cut the CRR in tranches rather than in one step?

The RBI said the aim was to inject durable liquidity. Spreading the cut over four fortnightly dates between September 6 and November 29, 2025 meant the extra funds reached the system in stages, not all on one settlement date.

How much money did the CRR cut free up for a bank?

Each 25 bps tranche freed Rs 25 lakh for every Rs 100 crore of NDTL. The full 100 bps cut freed Rs 1 crore per Rs 100 crore of NDTL. That is our arithmetic based on the ratio, not a figure the RBI published for individual banks.

Does the October 2026 repo rate hike reverse the CRR cut?

No. The MPC raised the repo rate by 25 bps to 5.50% on October 7, 2026, but no change to the CRR has been notified. They are separate tools: the repo rate sets the price of central bank funds, and the CRR sets how much cash banks must hold with the RBI.

Do banks earn interest on CRR balances?

No. Banks earn no interest on money held with the RBI to meet the CRR. That is why moving from 4.00% to 3.00% matters for profits: the Rs 1 crore released per Rs 100 crore NDTL can be put into assets that earn interest.

Where can I read the official CRR notification?

The circular and the notification DoR.RET.REC.24/12.01.001/2025-26 are on the Reserve Bank of India's website at rbi.org.in, in the notifications section, dated June 6, 2025.