RBI issues 2026 amendments to Cash Reserve Ratio and Statutory Liquidity Ratio rules for 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) Amendment Directions, 2026, bringing in targeted changes to the existing liquidity regulation and reporting framework applicable to small finance banks. These revised Directions take effect immediately from the date of issue and are intended to align the regulatory regime with the Banking Laws (Amendment) Act, 2025 and related subordinate legislation notified in late 2025 and early 2026.
The amendments primarily focus on:
- Broadening the list of recognised development financial institutions for liquidity purposes
- Updating and rationalising reporting formats and terminology
- Introducing a separate reporting line for deposits maintained with the RBI under the Standing Deposit Facility Scheme
- Removing outdated expressions such as “cash in hand” and certain variable time references
Legal authority and background
Statutory powers invoked
The Reserve Bank of India has framed these Amendment Directions by exercising its powers under the following statutory provisions:
Section 35Aof the Banking Regulation Act, 1949Section 42of the Reserve Bank of India Act, 1934Sections 18 and 24of the Banking Regulation Act, 1949 (as amended from time to time)- Other enabling provisions under applicable banking laws
The Directions state that the Reserve Bank, being satisfied that such measures are necessary and expedient in the public interest, has decided to modify the earlier framework governing Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) for small finance banks.
Link with recent legislative changes
The 2026 Amendment Directions must be understood in the context of the following legislative and regulatory developments:
Banking Laws (Amendment) Act, 2025
- This Act introduced various changes to the statutory framework regulating banking companies and related entities.
Banking Regulation (Companies) Amendment Rules, 2025
- These Rules were notified in the Gazette of India on December 10, 2025, bringing rule-level refinements to the amended primary law.
Reserve Bank of India Scheduled Banks’ (Amendment) Regulations, 2025
- These Regulations were notified in the Gazette of India on January 15, 2026, further updating the regulatory architecture for scheduled banks.
Given these developments, the RBI has now aligned the Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 with the updated legal framework by issuing the 2026 Amendment Directions.
Scope and commencement of the 2026 Amendment Directions
Title and nature of the Directions
The revised framework is formally titled:
Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Amendment Directions, 2026
These Directions operate as amendments to the existing Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025, and not as a stand-alone replacement document. Accordingly, only specified clauses, paragraphs, and annexes of the 2025 Directions are being modified.
Effective date
The RBI has categorically stated that the provisions come into force with immediate effect. This implies that:
- Small finance banks must implement these changes in their CRR and SLR computations and reporting from the date of the circular itself, without any deferment.
- Compliance systems, internal reporting templates, and regulatory returns must be updated promptly to reflect the revised requirements.
Key amendments made to the 2025 Directions
The 2026 Amendment Directions specifically modify paragraphs 19 and 28 of the 2025 Directions, along with Annex I (Form A) and Annex II (Form VIII). Each of these changes is discussed below.
Expansion of eligible counterparties – Paragraph 19(1)
Under the earlier framework, paragraph 19(1) of the 2025 Directions specified certain entities in relation to which particular exposures, investments, or balances could be considered for CRR/SLR or other prudential purposes.
The 2026 Amendment Directions expand this universe by explicitly inserting the words:
“other development financial institutions as defined in section 2 (cccii) of the RBI Act, 1934”
This addition has two key implications for small finance banks:
1.