The RBI in July had proposed that all banks should set aside an extra 5% ‘run-off-factor’ on digitally accessible retail deposits
Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said that the implementation of a proposal that mandates lenders to set aside more funds for digitally-linked deposits will be delayed by at least a year to March 2026, news agency Reuters reported.
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“(The) impact analysis of norms have been done but we are reviewing it again based on feedback received. We don’t want to cause any disruption from implementation of new norms,” the governor added.
What are the details of RBI’s earlier proposal?
The RBI in July proposed that all banks should set aside an extra 5% ‘run-off-factor’ on digitally accessible retail deposits.
A run-off factor refers to the percentage of deposits a bank expects will be withdrawn in a short-term period of stress.
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This is to better manage risks in cases of heavy withdrawals through internet or mobile banking, according to the report.
Though this requirement would come into effect from the financial year 2026-27, banks are estimating that the incremental impact on credit costs could go up by 0.5–1.75%, a Moneycontrol report stated.
Malhotra also added that the RBI will need more time to review the draft guidelines on the expected credit loss and project financing.
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