RBI CRR & SLR Relief for Rural Co-operative Banks on FCNR(B) Deposits: Detailed Analysis of Second Amendment Directions, 2026

Background and Context

The Reserve Bank of India has issued the “Reserve Bank of India (Rural Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Second Amendment Directions, 2026”, which take effect immediately from June 8, 2026.

These Amendment Directions modify the existing “Reserve Bank of India (Rural Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (Updated as on January 22, 2026)” and are directly linked to a broader policy initiative announced in the Governor’s Statement dated June 5, 2026.

In that statement, the Governor announced the introduction of a US Dollar-Rupee swap facility for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] dollar funds. To complement this move, RBI has now provided targeted regulatory relaxation to rural co-operative banks in respect of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) on specified FCNR(B) deposits.

Objective of the Second Amendment Directions, 2026

The stated regulatory measures are intended to:

  • Promote additional foreign currency inflows through FCNR(B) deposits;
  • Ease regulatory reserve requirements (CRR and SLR) on such deposits for rural co-operative banks;
  • Enhance overall liquidity in the rural co-operative banking segment; and
  • Support the US Dollar-Rupee swap facility by making FCNR(B) mobilization more attractive for banks.

By allowing certain FCNR(B) deposits to be exempt from both CRR and SLR, RBI effectively permits rural co-operative banks to deploy a larger portion of these funds for lending and investment, subject to other applicable regulations.

Key Regulatory Relaxation: Exemption from CRR and SLR

Category of Deposits Covered

The exemption applies only to a defined set of FCNR(B) deposits:

  1. Deposit Type

    • Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits.

  2. Eligible Tenor

    • Minimum tenor: three years
    • Maximum tenor: five years

  3. Time Window for Mobilization

    • Deposits must be mobilized (including renewals) between June 8, 2026 and September 30, 2026.
    • This covers:
      • Fresh FCNR(B) deposits opened during this period; and
      • FCNR(B) deposits that are renewed upon maturity during this period, provided they meet the tenor conditions.

  4. Applicable Institutions

    • The relaxation is specifically extended to rural co-operative banks, governed by the Reserve Bank of India (Rural Co-operative Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 as amended.

Nature of Exemption

CRR and SLR exemption is granted on the above qualifying FCNR(B) deposits.

  • CRR exemption:

    • These deposits will not be included in the base for computation of Cash Reserve Ratio for the eligible period and conditions.

  • SLR exemption:

    • Similarly, they will be excluded from the Statutory Liquidity Ratio requirement.

This dual relief significantly reduces the statutory reserve burden on rural co-operative banks in respect of these deposits, thereby improving their effective lendable resources.

Commencement and Duration of CRR Exemption

Effective Date for CRR Computation

The CRR exemption is linked to the reporting cycle as follows: