RBI Revises Liquidity Coverage Ratio (LCR) Framework to Strengthen Banking Liquidity Management.

Banking & Finance

On April 21, 2025, the Reserve Bank of India (RBI) announced key amendments to the existing Liquidity Coverage Ratio (LCR) framework.


      - These amendments will be applicable to all Commercial Banks, excluding Payments Banks, Regional Rural Banks (RRBs), and Local Area Banks (LABs).

      - To ensure a smooth transition, RBI has provided sufficient time for banks to align their systems with the new LCR computation standards. The revised instructions will come into effect from April 01, 2026.

     

Main Point :-   (i) Banks will now be required to assign an additional 2.5% run-off factor on retail deposits enabled with internet and mobile banking (IMB) facilities.

      (ii) As a result, the stable retail deposits with IMB facilities shall carry a 7.5% run-off factor (up from the earlier 5%).

(iii) The less stable retail deposits with IMB shall now carry a 12.5% run-off factor (up from the earlier 10%). These changes aim to enhance the accuracy and resilience of liquidity risk management practices across the banking sector.
About RBI

Governor : Sanjay Malhotra
Headquarter : Mumbai
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