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The Reserve Bank of India is actively tightening the liquidity tap this week using two decisive moves. Here is the breakdown: 1. Daily CRR Floor Raised from 90% to 99% (Effective October 16, 2026) The Cash Reserve Ratio (CRR) is the portion of customer deposits banks must maintain as cash balances with the central bank. While the headline CRR remains unchanged at 3.00%, the RBI is raising the minimum daily maintenance threshold from 90% to 99%, starting from the reporting fortnight beginning October 16, 2026. Previously, banks had breathing room to manage liquidity flexibly across the 14-day cycle as long as their two-week average matched the requirement. Under the new mandate, lenders must lock up virtually the entire mandated balance every single day, drastically cutting their daily surplus cash. For example, From RBL Bank’s official Q2 FY27 published today 12 October, Total Deposits as on 30 Sept 2026 = 1,56,272 crore. Headline CRR at 3% = 4,688.16 crore (14-day daily average). Old daily floor (90%) = 4,219.34 crore New daily floor (99%) from the fortnight beginning 16 Oct 2026 = 4,641.28 crore Daily flexibility drops from 469 crore to 47 crore. Roughly 422 crore of floating cash gets locked every night for RBL alone. For the entire Indian banking system, roughly 75,000 to 77,000 crore of extra cash gets locked every night across the banking system. 2. 25,000 Crore OMO Bond Sale Auction (Scheduled for October 13, 2026) The RBI is conducting an Open Market Operation (OMO) auction to sell government securities across six tranches maturing between 2030 and 2034. When banks and financial institutions purchase these bonds, liquid cash moves off bank balance sheets and directly into the RBI, pulling 25,000 crore out of the system in one go. Why the tightening? Coming right after the repo rate was raised by 25 basis points to 5.50%, these actions target systemic surplus liquidity (which hovered around 3.88 lakh crore). By locking up daily cash and absorbing reserves through bond sales, the RBI is ensuring interbank lending rates stay closely aligned with the policy rate to keep inflationary pressure in check.