RBI mandates 2.5% extra run-off factor

In a relief to banks, the Reserve Bank of India (RBI) has mandated a 2.5 percent additional run-off factor for retail deposits linked to internet and mobile banking (IMB) facilities for commercial banks.

- MANOJIT SAHA & ANUPREKSHA JAIN

This was stated in its final guidelines for computation of liquidity coverage ratio (LCR) compared to 5 percent proposed in the draft norms issued in July 2024.

In addition, funding from non-financial entities like trusts (educational, charitable and religious), partnerships and LLPs, among others, will attract a lower run-off rate of 40 percent against 100 percent currently.

The impact of banks' LCR — which they need to maintain at 100 percent — will be much lower compared to what the draft norms proposed.

These final norms, applicable to all commercial banks — excluding payments banks, regional rural banks and local area banks — will come into effect from April 1, 2026.