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RBI tightens the cash squeeze: banks must hold 99% of CRR every day from 16 Oct, ₹25,000 crore bond sale Tuesday, ₹2 lakh crore reverse repo today — as bank credit grows 19.4%

Five days after its rate hike, the RBI is pulling more cash out of the banking system. Banks will soon have almost no room to dip below their reserve requirement on any day, the RBI will sell ₹25,000 crore of government bonds on Tuesday, and a ₹2 lakh crore reverse repo runs this morning. Friday’s 10-day auction drew only ₹18,170 crore of ₹1.5 lakh crore. Loans are growing faster than deposits.

Capital Chronicle Desk~5 minDual-layer

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RBI’s liquidity moves, 8–12 Oct 2026:

MoveDetailDate
CRR daily floorBanks must keep at least 99% of required CRR every day (was 90%); fortnight average rule unchangedFrom fortnight beginning 16 Oct
OMO saleRBI sells up to ₹25,000 crore of G-Secs (six bonds, 2030–2034), bids 9:30–10:30 a.m.Tue 13 Oct; pay by noon 14 Oct
3-day VRRR₹2,00,000 crore notified, window 9:30–10:00 a.m., reverses Thu 15 OctMon 12 Oct (today)
10-day VRRR (Fri)₹1,50,000 crore notified; ₹18,170 crore accepted at 5.49%9 Oct
3-day VRRR (Fri)₹1,50,000 crore notified; ₹1,39,847 crore accepted at 5.49%; reverses today9 Oct

Banks, 30 Sep (RBI data): credit ₹229.95 lakh crore, +19.4% YoY (a year ago: +11.4%); deposits ₹283.96 lakh crore, +17.8% (a year ago: +9.9%).

Takeaway: The RBI is using several tools at once — reverse repos, a bond sale and now a tighter daily reserve rule — to soak up surplus cash after the hike. Banks are lending faster than they are raising deposits. Not investment advice.

Analysis

The CRR change, simply

Banks must keep a set share of deposits as cash with the RBI (the cash reserve ratio, CRR). The rule is met as an average over each reporting fortnight, but until now a bank could let its balance fall to 90% of the requirement on any single day, and make up the gap on other days. From the fortnight starting 16 Oct, that daily floor rises to 99% (RBI circular, 9 Oct). In effect, banks will have far less room to run their RBI balance down on any one day.

Context (Capital Chronicle arithmetic on RBI data): on 8 Oct, banks’ cash balances with the RBI were ₹7,90,359 crore, against an average daily requirement of ₹8,17,219 crore for the fortnight ending 15 Oct — about 96.7%. Allowed today; below a 99% floor.

Banks did not want to lock money for 10 days

Friday’s results show where the cash sits. Banks gave the RBI only ₹18,170 crore — about 12% of the ₹1.5 lakh crore offered — for 10 days, but ₹1,39,847 crore (about 93%) in a second, 3-day auction the same morning (Capital Chronicle arithmetic). Both cleared at 5.49%, just under the 5.50% repo rate. That 3-day money comes back today, and the RBI is offering a larger ₹2 lakh crore 3-day window to take it — and more — back out. Thursday’s 29-day auction had drawn ₹79,655 crore of ₹2 lakh crore (Thursday’s story).

On 8 Oct the overnight money market traded at a weighted 5.27% (call money 5.30%), and the RBI’s net absorption from all operations that day was about ₹3.88 lakh crore, per its money-market release.

Bond sale: RBI as a seller

An OMO sale means the RBI sells government bonds from its own book; buyers pay cash, which leaves the banking system. Tuesday’s auction offers six bonds maturing between March 2030 and April 2034, with no fixed amount per bond. On Friday, the government’s own ₹36,000 crore bond auction cleared with no devolvement on primary dealers: the 7.06% GS 2041 at a cut-off yield of 7.4898% and the 7.43% GS 2076 at 7.8015%. A ₹23,000 crore T-bill auction follows on Wed 14 Oct.

Loans outrunning deposits

Scheduled commercial banks (₹ crore)30 Sep 2026YoY growthYear-ago growth
Aggregate deposits2,83,95,69317.8%9.9%
Bank credit2,29,94,65819.4%11.4%
Money supply (M3)3,37,66,47516.9%9.6%

Credit equals about 81% of deposits (Capital Chronicle arithmetic). When loans grow faster than deposits, banks compete harder for deposits — one reason borrowers and savers should watch deposit-rate filings next.

Loan rates: one more data point

Bank of Baroda, which raised its repo-linked rate (BRLLR) to 8.15% on 8 Oct (our bank-rates story), filed its MCLR review on Friday: unchanged w.e.f. 12 Oct — overnight 7.85%, 1-month 7.95%, 3-month 8.30%, 6-month 8.50%, 1-year 8.75%. So repo-linked borrowers pay more; MCLR borrowers at BoB do not, for now.

What to watch

  1. Today’s ₹2 lakh crore VRRR result (after 10 a.m.)
  2. Tuesday’s OMO sale result and bond yields
  3. Bank deposit-rate changes after the hike

Sources

Ratios marked “Capital Chronicle arithmetic” are our calculations on RBI figures. Not investment advice.

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