India’s central bank has tightened policy to support the rupee and cleared a key step in a Dubai lender’s expansion.
The Reserve Bank of India has spent the past two weeks rolling out a series of measures to steady the Indian rupee, which has been under heavy pressure this year.
The latest step took effect on Friday. Banks now have to keep a bigger share of their required cash reserves with the central bank every day, a move aimed at pulling surplus money out of the banking system.
On the same day, the RBI approved the merger of Emirates NBD’s Indian branches into RBL Bank, the private lender the Dubai bank took control of earlier this year.
The shift began on October 7, when the RBI’s Monetary Policy Committee raised the repo rate by 25 basis points to 5.50 percent. Trading Economics noted it was the first hike since February 2023. It came as the rupee weakened and several central banks, including the US Federal Reserve, raised their own rates.
The committee also changed its policy stance to “calibrated tightening.” The Standing Deposit Facility rate now stands at 5.25 percent, while the Marginal Standing Facility rate and the Bank Rate rose to 5.75 percent.
Three days later, the RBI announced a wider package for the currency. Bloomberg described it as the central bank’s strongest action since India’s 2013 currency crisis. The steps included a special window to meet the dollar needs of state-run oil companies. Banks must also now set aside cash with the RBI for certain foreign exchange transactions.
The RBI then extended curbs on some derivative trades. The rupee climbed to about 95 per dollar on October 13 but was still down more than 5 percent for the year, hit by high oil prices and foreign outflows.
India’s foreign exchange reserves stood at $734.6 billion in the latest reading, down from $747.56 billion in the previous one.
New Cash Reserve Ratio Rule for Indian Banks
From the reporting fortnight starting October 16, banks must keep at least 99 percent of their required cash reserve ratio (CRR) on a daily basis. The earlier threshold was 90 percent. The RBI said the change followed a review of liquidity conditions.
The rule does not raise the CRR itself. Banks still need their average balance over each fortnight to meet the full requirement. Surplus liquidity in the banking system stood at around ₹3.88 trillion as of October 8, based on central bank figures.
Emirates NBD RBL Bank Merger Set for December 1
The RBI sanctioned the scheme of amalgamation on Friday, Khaleej Times reported. The merger takes effect on December 1, 2026. After that date, all of Emirates NBD’s Indian branches will operate as RBL Bank branches.
Emirates NBD runs three branches in India, in Mumbai, Chennai, and Gurugram. RBL Bank has more than 600 branches and about 15 million customers, Gulf News reported.
The Dubai lender completed its purchase of a majority stake in RBL Bank on June 18. It injected roughly $2.75 billion in fresh capital and now holds 60 percent of the bank’s expanded share capital. Both banks have called it the largest foreign direct investment in India’s banking sector.
RBL Bank’s chief executive, R. Subramaniakumar, said in January that the bank would focus on serving non-resident Indians as it integrates with Emirates NBD’s network, Reuters reported.
Indian banks began operating under the new daily cash reserve rule on Friday. The Emirates NBD branch transfer is due to be completed by December 1.
