RBI's New Rule: Banks Must Maintain Extra 2.5% Reserve on Digital Deposits to Tackle Crisis Situations

In a significant move to strengthen the banking system against potential financial stress, the Reserve Bank of India (RBI) has introduced new guidelines for banks. Starting from April 1, 2026, all banks will be required to maintain an additional liquidity buffer equivalent to 2.5% of deposits held by retail and small business customers who use internet and mobile banking services.

This proactive measure by the RBI aims to ensure the financial sector is better prepared for sudden cash withdrawal scenarios, which can occur during periods of economic instability or market uncertainty. The directive was officially announced on Monday, underlining the central bank's continued efforts to enhance financial resilience across the country.

Last year, in July 2024, the RBI had floated a draft proposal suggesting a 5% ‘run-off factor’ on digital-friendly deposits. The term ‘run-off factor’ refers to the estimated proportion of deposits that might be withdrawn by customers during financially stressed situations. The move was influenced by patterns observed in global markets, where customers, especially those with easy digital access, have been seen to withdraw large amounts quickly during crises.

RBI’s recent directive is a refinement of that proposal, and by setting the additional liquidity requirement at 2.5%, the regulator is striking a balance between caution and operational flexibility for banks. The main objective is to prepare banks for the growing trend of instant fund transfers via digital platforms, which, while convenient, also increases the pace at which funds can exit the system.

According to RBI officials, the changing behavior of depositors, combined with the rise in internet and mobile banking usage, has created the need for this adjustment. Banks are now expected to maintain stronger liquidity positions to ensure stability even in cases of sudden digital outflows.

Financial experts have largely welcomed the RBI's decision, noting that in today’s digital era, risk management strategies must evolve in line with customer behavior and technology. This new rule is seen as a positive step toward safeguarding the financial system against modern threats, while also promoting confidence among customers.

As digital banking continues to reshape financial interactions, regulatory bodies like the RBI are expected to further adapt policies to ensure the security and reliability of the Indian banking sector.