The Reserve Bank of India’s Amendment Directions issued on January 22, 2026, update the framework governing the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements of Urban Co-operative Banks (UCBs). The changes are technical and clarificatory, but they remain important for regulatory reporting, liquidity management and compliance controls.
CRR is the prescribed portion of a bank’s net demand and time liabilities maintained as cash reserves, while SLR requires banks to hold a specified proportion in eligible liquid assets. Accurate computation and reporting are essential because errors may lead to regulatory observations, incorrect liquidity assessments and statutory compliance weaknesses.
Broader Recognition of Development Financial Institutions
A key amendment expands the institutional references appearing in the reporting annexures. Instead of limiting the formats to a narrow list of specified institutions, the revised framework recognises a broader range of development financial institutions.
The updated references include:
- National Housing Bank
- Small Industries Development Bank of India
- National Bank for Financing Infrastructure and Development
- Other development financial institutions recognised under the applicable legal framework
This wider coverage reflects the growing role of specialised institutions in infrastructure, housing, MSME and development finance. It also ensures that UCB reporting formats remain aligned with India’s contemporary financial system.
UCBs should review their counterparty masters and confirm that balances involving these institutions are correctly identified and mapped to appropriate regulatory reporting categories.
Simplification of Regulatory Language
The Amendment Directions streamline certain expressions used in the reporting forms. Outdated or ambiguous wording has been removed, while phrases such as “as notified by the Reserve Bank” have been inserted where relevant.
This approach provides flexibility because an applicable percentage or regulatory treatment can be updated through an RBI notification without repeated structural amendments to the Directions.
For UCBs, a regulatory return should not be interpreted in isolation. Compliance teams must read the prescribed form together with the latest RBI notifications, circulars and operational instructions.
Banks should:
- Verify the currently notified percentage before preparing returns
- Update internal compliance manuals and process notes
- Remove outdated terminology from system-generated reports
- Ensure consistent interpretation across treasury, finance and compliance teams
- Preserve supporting documents for the treatment adopted
Standing Deposit Facility Reporting
Another important change is the introduction of a reporting item for amounts deposited with the RBI under the Standing Deposit Facility Scheme. The SDF is a monetary-policy tool through which eligible entities may place funds with the RBI, allowing the central bank to absorb liquidity without providing collateral.
Its inclusion improves transparency and ensures that SDF balances are separately captured in statutory returns. The RBI’s SDF scheme has been operational since April 8, 2022.
UCBs using the facility should establish controls covering:
- Correct identification of SDF transactions
- Reconciliation with RBI statements and treasury records
- Appropriate accounting and regulatory classification
- Accurate inclusion in the relevant reporting annexure
- Maker-checker verification before return submission
Operational Priorities for UCBs
The amendments require more than a textual change to reporting templates. UCBs should assess whether their technology, accounting and compliance systems capture the revised requirements correctly.
Immediate priorities should include:
- Updating Annex I and Annex III reporting formats
- Revising institutional and counterparty classifications
- Testing automated CRR and SLR reports
- Reconciling the general ledger with statutory returns
- Training employees responsible for liquidity reporting
- Escalating classification differences before submission
- Conducting periodic internal audits of CRR and SLR compliance
Board and senior management oversight matters. Periodic reviews should confirm that regulatory changes have been implemented, reporting logic has been tested and supporting records are available for supervisory examination.
