RBI Strengthens Liquidity Buffer for Digital Banking

The Reserve Bank of India (RBI) mandates banks to increase liquidity buffers for internet and mobile banking-enabled deposits from April 2026. The directive aims to mitigate risks during financial stress by aligning with global standards. This move follows extensive stakeholder feedback and a year-long review process.

The Reserve Bank of India (RBI) has issued new directives requiring banks to allocate additional liquidity buffers for deposits facilitated by internet and mobile banking services. This change, effective from April 2026, is aimed at preventing potential financial risks during periods of economic stress.

According to the RBI, the revised framework, which has been in development for nearly a year, is designed to enhance the liquidity coverage ratio (LCR) and bring Indian banks in line with global best practices. The decision was influenced by international incidents where rapid digital fund transfers occurred during financial downturns.

In addition to the updated LCR requirements, the guidelines also adjust the run-off rates for wholesale funding from non-financial entities, granting lower rates to trusts, partnerships, and LLPs. These changes are expected to improve banks' overall liquidity resilience and ensure regulatory compliance.

(With inputs from agencies.)