Upping of daily CRR maintenance requirement could lead to small dilution in banks’ interest margins: Jefferies
BusinessLine 1 hr ago·12 Oct 2026, 4:57 am
The Reserve Bank of India (RBI) has increased the Cash Reserve Ratio (CRR) requirement for scheduled commercial banks from 90% to 99% of net demand and time liabilities (NDTL). This means banks must keep a larger portion of their deposits idle with the central bank rather than lending them out, which reduces the amount of money available for credit growth.
For investors, this move is a key signal of the RBI's 'calibrated tightening' stance to control inflation. By restricting liquidity, the central bank aims to cool down price pressures. The primary concern for the banking sector is that this higher CRR requirement will squeeze their net interest margins, potentially leading to a slight reduction in profitability.
Investors should monitor the quarterly earnings reports of major banks to see how they are managing this liquidity constraint. While the immediate impact may be modest, the move sets a clear tone for tighter monetary policy, which could influence interest rates and loan growth in the coming months.
Excerpt from BusinessLine
The upping of the daily Cash Reserve Ratio (CRR) maintenance requirement from 90 per cent to 99 per cent within the CRR norm of 3 per cent of deposits, could lead to a small dilution in banks’ net interest margins (NIMs), which they may be able to pass to borrowers, according to Jefferies “ In line with the change in…Read the original at BusinessLine
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- Category: Economy.
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