The first tranche of the Reserve Bank of India's 100 basis point Cash Reserve Ratio (CRR) reduction took effect from the reporting fortnight beginning September 6, 2025. Banks are now required to maintain CRR at 3.75% of Net Demand and Time Liabilities (NDTL), down from 4%. Announced as part of the June 2025 Monetary Policy alongside a 50 bps repo rate cut to 5.5%, the CRR cut will be delivered in four equal tranches of 25 bps each on September 6, October 4, November 1, and November 29, 2025, reducing CRR from 4% to 3%. The phased reduction will release approximately ₹2.5 lakh crore of primary liquidity into the banking system by December 2025, supporting credit growth and economic activity.
RBI's Phased CRR Reduction Begins: First 25 bps Cut Effective September 6
AQuick answer
RBI's phased CRR cut begins Sep 6; first 25 bps tranche takes CRR to 3.75%, releasing ₹2.5 lakh crore by December 2025.
Key facts
- First tranche of RBI's 100 bps CRR reduction took effect from September 6, 2025, reducing CRR from 4% to 3.75%
- CRR cut delivered in four equal tranches of 25 bps each on September 6, October 4, November 1, and November 29, 2025
- Final CRR will reduce from 4% to 3% by end-November 2025
- Phased reduction will release approximately ₹2.5 lakh crore of primary liquidity into banking system
- Announced alongside 50 bps repo rate cut to 5.5% as part of June 2025 Monetary Policy
Mains angle
Q: Explain the Reserve Bank of India's phased Cash Reserve Ratio reduction announced in June 2025, including the schedule, liquidity injected and linkage with the repo rate action during the same monetary review.
Answer (50 words):
The Reserve Bank of India announced a 100 basis point Cash Reserve Ratio cut in June 2025, delivered in four equal tranches of 25 basis points on September 6, October 4, November 1 and November 29, 2025, reducing CRR from 4 percent to 3 percent, releasing approximately ₹2.5 lakh crore liquidity.
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Source: Business Standard
Frequently asked questions
What is the CRR reduction by RBI and what was the first cut effective from September 6?
**RBI** announced a **phased CRR (Cash Reserve Ratio) reduction**. The **first cut of 25 basis points (bps) was effective from September 6, 2025**, releasing liquidity into the banking system as part of RBI's monetary easing cycle.
What is the Cash Reserve Ratio (CRR) and how does it affect the economy?
**CRR** is the percentage of a bank's total deposits that it must keep with the **RBI** as liquid cash (not lent out). Reducing CRR **increases liquidity** in the banking system, enabling banks to lend more, reducing interest rates, and stimulating investment and economic growth.
What is the difference between CRR, SLR, and Repo Rate in India's monetary policy tools?
**CRR**: % deposits kept with RBI (no interest earned). **SLR (Statutory Liquidity Ratio)**: % deposits invested in approved govt securities. **Repo Rate**: Rate at which RBI lends to banks. All three are **RBI monetary policy tools** — CRR and SLR are reserve requirements; repo rate is price of liquidity.
What is the Monetary Policy Committee (MPC) of RBI and who are its members?
The **MPC (Monetary Policy Committee)** has **6 members**: **3 RBI officials** (Governor as Chair, Deputy Governor, RBI-nominated member) and **3 external members** appointed by the government. It meets bi-monthly to decide on the **policy repo rate** based on inflation and growth outlook.
What impact does a CRR cut have on banks and the broader economy?
A **CRR cut** releases **funds in banks** (the full 100 bps CRR reduction releases about ₹2.5 lakh crore into the system). Banks have more money to lend, pushing down **lending rates**. This reduces **EMIs** on home/auto/personal loans, boosts consumption, investment, and credit growth in the economy.
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