Mumbai: The Reserve Bank of India (RBI) has introduced new rules for banks under the Liquidity Coverage Ratio (LCR) framework. These rules will come into effect from April 1, 2026, and are designed to strengthen the liquidity position of Indian banks.
Key Changes in Deposit Run-Off Rates
From April 2026, banks will need to apply an extra run-off rate of 2.5 per cent on deposits made by retail and small business customers if they use internet or mobile banking. This means that such deposits will be treated as more likely to be withdrawn quickly in times of stress.
Haircuts on Government Securities
Banks will also need to adjust the value of Government Securities they hold. These securities, which count as High-Quality Liquid Assets (HQLA), will now have haircuts (reductions in value) based on the margin rules under the Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF). This is to make the valuation more realistic during stress periods.
Changes to Wholesale Funding Treatment
Another major update relates to how banks handle funding from non-financial entities like trusts, partnerships, LLPs, and others. Earlier, such funds were assumed to be fully withdrawn in stress (100 per cent run-off rate). Now, this has been lowered to 40 per cent, making it easier for banks to manage liquidity.