The Reserve Bank of India (RBI) on Monday directed banks to set aside 2.5 per cent of additional cash as a buffer on deposits of retail and small business customers with internet and mobile banking facilities from April 1 next year to avoid any potential risks during times of stress.
In July last year, the RBI had proposed an additional five percent ‘run-off factor’. This means the percentage of deposits that the bank expects to be withdrawn in times of stress. In some countries, it was found that in a situation of financial stress, depositors withdrew their money immediately using digital banking.
The revised framework has been brought keeping that in mind. RBI said in a circular that from April 1, 2026, banks will have to allocate an additional 2.5 percent ‘run-off factor’ for retail deposits with internet and mobile banking facilities (IMB).
RBI said the decision was taken following feedback from various stakeholders on the draft guidelines on ‘Basel-III framework on liquidity standards – review of liquidity coverage ratio (LCR) – cut-off on high quality liquid assets (HQLA) and ‘run-off rates’ on certain categories of deposits’ released last July.
According to the latest guidelines, “The bank will have to set an additional ‘run-off factor’ of 2.5 per cent for retail deposits with internet and mobile banking facilities (IMB). This means that there will be a 7.5 per cent ‘run-off factor’ for stable retail deposits with IMB facility and a 12.5 per cent run-off factor for less stable deposits with IMB. Currently it is five per cent and 10 per cent respectively. ”
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