RBI on Monday directed banks to set aside 2.5 per cent of additional cash as a buffer on deposits of retail and small business customers with internet and mobile banking facilities from April 1 next year to avoid any potential risk in times of stress.
The Reserve Bank of India (RBI) on Monday directed banks to set aside 2.5 per cent of additional cash as a buffer on deposits of retail and small business customers with internet and mobile banking facilities from April 1 next year to avoid any potential risk in times of stress.
RBI had proposed an additional ‘run-off factor’ of five per cent in July last year. This means the percentage of deposits that the bank expects to be withdrawn in times of stress. In some countries, it was found that in a situation of financial stress, depositors withdrew their money immediately using digital banking.
The revised framework has been brought keeping that in mind. RBI said in a circular that from April 1, 2026, banks will have to allocate an additional 2.5 per cent ‘run-off factor’ for retail deposits with internet and mobile banking facilities (IMB).
RBI said that this decision has been taken after the feedback from various parties on the draft guidelines on ‘Basel-III framework on liquidity standards – review of liquidity coverage ratio (LCR) – reduction on high quality cash assets (HQLA) and ‘run-off rates’ on certain categories of deposits’ released last July.
According to the latest guidelines, “The bank has to set an additional ‘run-off factor’ of 2.5 per cent for retail deposits with internet and mobile banking facilities (IMB). This means that there will be a 7.5 per cent ‘run-off factor’ for stable retail deposits with IMB facility and a 12.5 per cent run-off factor for less stable deposits with IMB. Currently it is five per cent and 10 per cent respectively. ”
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