Distinguish between changes in the CRR rate and changes in its daily maintenance requirement as tools of liquidity management. Why might the RBI prefer the latter?

Under Section 42(1) of the RBI Act, 1934, banks must keep a set share of their NDTL as cash with the RBI [1]. In October 2026 the RBI raised the daily minimum from 90% to 99% of the required CRR, from 16 October. It left the CRR rate unchanged [2]. This shows a finer, operational lever at work alongside the headline rate.

Distinguishing the two tools

Why the RBI may prefer the daily requirement

• Restoring transmission: a ₹3.88 lakh crore surplus [2] pushes WACR, the operating target, toward the SDF floor (repo − 25 bps) [4]. At 99%, a bank's daily buffer shrinks from 10% to 1%. Banks therefore turn to the call market, and WACR moves back up toward repo.
• No policy U-turn: it drains cash without reversing the 2025 CRR cut, which avoids sending mixed signals.
• Certainty and cost: 7-day VRRR is the main operation under the 2025 framework [4], but it relies on banks choosing to bid, and the RBI pays interest on every rupee it absorbs. A maintenance rule binds every bank every day at no cost to the RBI.
• Calibrated and reversible: it removes only day-to-day slack and can be eased once the surplus normalises, as in 2013 [3].

Caveats

• CRR balances earn no interest, so the rule works as an implicit tax that may reach borrowers.
• With averaging almost gone, outflows on dates such as advance-tax days may cause call-rate spikes.

Changes to the CRR rate reshape durable liquidity, while the daily requirement fine-tunes frictional liquidity quietly and quickly. Used as a temporary complement to VRRR, it helps keep WACR anchored to the repo rate, in line with the 2025 liquidity framework's goals [4]. If it stays for long, it should get a formal review.