The Reserve Bank of India has issued Fourth Amendment Directions for small finance banks regarding CRR and SLR, granting exemptions to certain deposits. This amendment aims to enhance liquidity and support financial stability.
RBI Releases Fourth Amendment Directions for Small Finance Banks' CRR and SLR
On August 25, 2026, the Reserve Bank of India announced the Fourth Amendment Directions related to the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) for small finance banks. These directions grant exemptions for specific new deposits, including FCNR(B) deposits, from maintaining the usual CRR and SLR ratios.
This amendment is in continuation of the RBI's earlier Directions issued on November 28, 2025, which were also updated in June 2026. This regulatory change is a step toward alleviating the liquidity constraints faced by small finance banks, allowing for improved operational flexibility.
The exemption from maintaining the CRR and SLR on certain deposits is expected to bolster the capacity of small finance banks to manage their resources effectively while expanding their lending operations.
“Such regulatory flexibility is pivotal for small finance banks to foster growth and stability in their operations,” noted an RBI representative.
Legal practitioners should closely monitor these developments to effectively advise clients on compliance and operational efficiencies in the context of changing liquidity requirements.
Citations
- Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions (2026) RBI/2026-27/239