The RBI’s Third Amendment Directions, issued June 19, 2026, exempt fresh Non-Resident (External) Rupee deposits with three-year or longer tenure from Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements. The exemption applies to deposits mobilized between June 19, 2026 and September 30, 2026, effective from the July 16, 2026 reporting fortnight.
What Changed: The 30-Second Answer
On June 19, 2026, the RBI issued the Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Third Amendment Directions, 2026 (RBI/2026-27/145) exempting fresh NRE term deposits with minimum three-year tenor from CRR and SLR maintenance. The exemption runs from June 19 through September 30, 2026, and applies to both new deposits and renewed-upon-maturity deposits. Banks must report this separately in Form A, item VIII.8, starting with NDTL computations as of June 30, 2026.
Why This Circular Matters Right Now
NRE deposits are a critical source of foreign currency inflow and Non-Resident rupee liquidity. By exempting them from reserve requirements during this three-month window, the RBI is explicitly signaling support for NRE mobilization—a move that reduces the cost of deposit-gathering for banks and creates a temporary competitive advantage for institutions with strong diaspora networks.
The timing is deliberate: a mid-year exemption coupled with a specific sunset (September 30, 2026) suggests the RBI is addressing a measured but time-bound liquidity or forex management objective. For banks reliant on NRE flows, this is a material relief. For those with weak NRE franchises, it’s a subtle reminder that the regulator expects active pursuit of this segment.
Who Does This Apply To?
This circular applies to all commercial banks (as defined under the Banking Regulation Act, 1949) operating in India and accepting NRE deposits. The exemption covers:
- Fresh NRE term deposits of three years or more tenor mobilized on or after June 19, 2026 and up to and including September 30, 2026.
- Renewed NRE deposits: deposits that are renewed upon maturity during this window also qualify, provided the original tenor was three years or longer.
- Original deposit amounts only: the exemption covers the principal amount for as long as the deposit remains on the bank’s books. Accrued interest is not exempt.
What does NOT qualify: The circular explicitly excludes funds transferred from Non-Resident (Ordinary) (NRO) accounts to NRE accounts. Only genuinely fresh or naturally renewed NRE term deposits qualify.
Effective Date and Compliance Timeline
The Amendment Directions came into force with immediate effect on June 19, 2026. However, the reserve maintenance exemption itself takes effect from the reporting fortnight beginning July 16, 2026—based on NDTL (Net Demand and Time Liabilities) computation as of June 30, 2026.
This means banks have a narrow window: deposits mobilized between June 19 and June 29, 2026 will first appear in the July 16 fortnight calculation. Banks should ensure their systems can:
- Tag NRE term deposits ≥3 years mobilized between June 19–September 30, 2026 separately in their NDTL templates.
- Exclude these amounts from CRR and SLR calculations starting July 16, 2026.
- Report the exempted amount in Form A, item VIII.8 (“NRE Term deposits – 2026 [para 20(9)]”).
- Continue the exclusion “for subsequent fortnights thereafter” as long as the deposits remain on the books.
Changes to the Reserve Maintenance Framework
The RBI’s Third Amendment modifies the Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 (as updated June 8, 2026) in three specific ways:
- New paragraph 20(9) inserted: The regulator has added a new sub-paragraph explicitly defining the exemption and its scope. Deposits must be held continuously; once withdrawn or transferred, the exemption ceases for that amount.
- Paragraph 29(5) updated: References to SLR exemptions now include the new paragraph 20(9), ensuring consistency across the directions.
- Form A annex revised: Item VIII.8 now captures “NRE Term deposits – 2026” separately; the former item VIII.8 was renumbered to VIII.9. Banks must use this new classification in their fortnight-end reporting.
Practical Implementation Steps for Treasury and Compliance
Treasury teams must immediately:
- Update deposit classification logic to flag NRE term deposits ≥3 years mobilized June 19–September 30, 2026.
- Create a separate ledger or sub-code for these deposits so they can be excluded from CRR/SLR calculations without manual intervention.
- Ensure system-generated NDTL schedules automatically reflect the exclusion from July 16 onwards.
Compliance teams must:
- Confirm that deposit application forms and backend systems capture the deposit tenor explicitly and the mobilization date.
- Audit Form A item VIII.8 submissions to RBI starting with the July 16 fortnight to ensure no misclassification of NRO-to-NRE transfers or deposits with tenor <3 years.
- Document the methodology used to track the exemption and retain evidence of compliance for at least the audit period.
Operations teams must:
- Ensure deposit renewal instructions capture the original tenure and mobilization date so renewed deposits are correctly classified if they fall within the window.
- Flag any deposits that breach the September 30, 2026 cutoff so reserves resume from October 2026 onwards.
The Algoy Perspective
Banks are racing to mobilize NRE deposits in the next 102 days—and many will get this wrong.
The single biggest implementation trap: date precision. A deposit mobilized on September 30, 2026 qualifies; October 1, 2026 does not. In a rush to hit targets, branch operations and third-party deposit aggregators will blur this boundary. Worse, deposit slips and bank statements often show a “credited to account” date that differs from the “mobilization” or “value” date by 1–3 days. Your backend system must enforce the June 19–September 30 window at the point of deposit booking, not approval or credit.
Second, the “renewed upon maturity” language invites misinterpretation. This does NOT mean you can take a 2-year NRE deposit, let it mature, and immediately roll it into a 3-year deposit to claim the exemption retroactively. Only deposits that were already three years or longer at the time of original mobilization (or renewal during the June–September window) qualify. Deposits that happen to renew into a 3-year tenor after the window closes do not qualify.
Third, the exclusion of NRO-to-NRE transfers is a compliance minefield. Some customers will attempt to repatriate foreign funds by first depositing into an NRO account, then transferring to NRE to claim the exemption. Your KYC and deposit-taking procedures must include a question: “Is this deposit a fresh mobilization or a transfer from another bank/account?” Document the answer. The RBI will examine this in audit.
Finally, watch the renewal mechanics. If a 3-year NRE deposit mobilized in June 2024 matures in June 2027 and you renew it in June 2027 (after the exemption window), it does NOT qualify. But if it matures and is renewed in June 2026, it does. Your deposit management system must flag all NRE renewals between June 19 and September 30, 2026 and check original tenor. A single miscalculation across 1,000 deposits could mean excess CRR/SLR reporting to RBI and regulatory friction.
Frequently Asked Questions
Does the exemption apply to NRE deposits mobilized before June 19, 2026?
No. The circular explicitly states the exemption covers deposits “mobilized (including deposits that are renewed upon maturity) by the banks between June 19, 2026 and September 30, 2026.” Deposits already on the books before June 19 remain subject to normal CRR and SLR requirements regardless of tenor.
If a 3-year NRE deposit matures after September 30, 2026, does it still get the exemption?
Yes, provided the deposit was mobilized (or renewed) on or before September 30, 2026. The exemption applies “for the original deposit amounts till such time the deposits are held in the bank books.” The maturity date does not matter; the mobilization date does. A deposit mobilized on September 30, 2026 and maturing in 2029 remains exempt from CRR/SLR throughout its tenure.
Can banks use this exemption as a pricing tool to attract NRE deposits?
Tactically, yes. The exemption reduces banks’ reserve costs on NRE deposits, which can be passed to customers as slightly higher deposit rates or relationship benefits. However, the RBI’s intent is to incentivize NRE mobilization broadly, not to undermine pricing discipline. Aggressive NRE deposit rate offers during this window may attract RBI scrutiny under deposit rate guidelines if they appear to breach system stability or competitive norms. Proceed with caution.
What happens on October 1, 2026?
Any NRE term deposit <3 years mobilized after September 30, 2026 reverts to standard CRR and SLR treatment. NRE deposits mobilized before October 1 that are ≥3 years continue to enjoy the exemption. Banks should prepare deposit mobilization forecasts to anticipate a potential cliff in inflows as the exemption expires.
Sources and Further Reading
- Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Third Amendment Directions, 2026
- Reserve Bank of India official website
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