The Reserve Bank of India (RBI) has granted a temporary exemption from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements on fresh Non-Resident (External) Rupee (NRE) term deposits mobilised by Small Finance Banks (SFBs), effective June 19, 2026.
Under the Third Amendment to the RBI (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2026, NRE term deposits with a tenor of three years or more — including those renewed upon maturity — will be exempt from CRR and SLR maintenance, provided they are mobilised between June 19, 2026 and September 30, 2026.
The CRR exemption will apply from the reporting fortnight beginning July 16, 2026, based on the Net Demand and Time Liabilities (NDTL) computation as on June 30, 2026. The relief will continue for subsequent fortnights and will remain available on the original deposit amounts for as long as those deposits are held on the bank’s books.
Importantly, the RBI has clarified that any funds transferred from Non-Resident (Ordinary) (NRO) accounts to NRE accounts will not be eligible for this exemption. Only genuinely fresh NRE term deposits within the specified window will qualify.
The amendment modifies paragraph 20 of the existing SFB CRR-SLR Directions, 2025, by inserting a new sub-paragraph 7 detailing the exemption criteria. Corresponding changes have also been made to paragraph 29(5) and the reporting form (Form A, Annex A) to reflect the updated provisions.
This move is expected to incentivise Small Finance Banks to aggressively attract long-term NRE deposits from the Indian diaspora, improving their liability franchise and reducing funding costs. By freeing up reserves that would otherwise be locked in CRR and SLR requirements, SFBs gain more lendable resources during the exemption period.
The directions have been issued under Section 35A of the Banking Regulation Act, 1949, and in pursuance of Section 42 of the Reserve Bank of India Act, 1934, along with Sections 18 and 24 of the Banking Regulation Act, 1949. The amendment came into force with immediate effect upon issuance.
Full details are available in the official RBI notification issued by Chief General Manager Manoranjan Padhy.
Source: RBI Notifications
