RBI’s Second Amendment Directions 2026: CRR & SLR Relaxation for FCNR(B) Deposits of Small Finance Banks

The Reserve Bank of India has issued the Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Second Amendment Directions, 2026, introducing targeted regulatory relaxations for Small Finance Banks in respect of specified Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.

These Directions, effective immediately from June 08, 2026, are aligned with the RBI Governor’s policy announcement on a US Dollar–Rupee swap window intended to draw additional foreign currency deposits into the banking system and strengthen foreign exchange inflows.

Policy Background and Objective

In the Governor’s Statement dated June 5, 2026, the RBI announced the introduction of a US Dollar–Rupee swap facility against fresh FCNR(B) dollar funds. The key features of that policy initiative were:

  • The swap facility would be available for fresh FCNR(B) dollar deposits.
  • Eligible deposits must carry a minimum tenor of three years and a maximum tenor of five years.
  • The arrangement is designed to promote greater foreign currency inflows through the banking system while providing hedging and liquidity options to banks.

The present Second Amendment Directions operationalise a complementary prudential relaxation by exempting specified FCNR(B) deposits from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements.

Note: These Directions specifically address Small Finance Banks and amend the existing Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on January 22, 2026).

Core Change: CRR and SLR Exemption for Fresh FCNR(B) Deposits

Eligible Deposits and Time Window

Under the Second Amendment Directions, the RBI has decided that:

  • Type of deposits covered:
    • Fresh FCNR(B) deposits, and
    • FCNR(B) deposits that are renewed on maturity,
  • Tenor condition:
    • Minimum tenure of three years;
    • Maximum tenure of five years;
  • Mobilisation period:
    • Deposits mobilised during the period starting from June 8, 2026 up to September 30, 2026 (both dates inclusive).

All such qualifying deposits will be exempted from:

  • Maintenance of Cash Reserve Ratio (CRR); and
  • Maintenance of Statutory Liquidity Ratio (SLR).

This exemption effectively reduces the regulatory cost for Small Finance Banks on qualifying foreign currency deposits, potentially improving their ability to offer competitive returns to non-resident depositors.

Commencement of CRR Exemption

For CRR purposes, the exemption is linked to the reporting cycle in the following manner:

  • The CRR exemption applies beginning with the reporting fortnight starting July 1, 2026.
  • The computation is based on the Net Demand and Time Liabilities (NDTL) as on June 15, 2026.
  • The exemption continues for subsequent reporting fortnights so long as the qualifying deposits remain outstanding on the books of the bank.

Key point: The relief is available only in respect of the original deposit amount. Any subsequent changes beyond the original principal (e.g., accretions, top-ups) need to be evaluated in terms of applicable regulatory instructions at the relevant time.

Duration of Exemption

The RBI has clarified that the exemption from reserve maintenance: