RBI Delays Digital Deposit Buffer Mandate for Banks Until 2026

The RBI has postponed its digital deposit buffer mandate by a year to March 2026. The policy requires banks to set aside an extra 5% on digitally accessible deposits to manage withdrawal risks. Governor Sanjay Malhotra cited stakeholder feedback as the reason for the delay, allowing banks more time to adjust.

The Reserve Bank of India (RBI) has postponed the implementation of its proposed digital deposit buffer mandate by a year, pushing the deadline to March 2026. RBI Governor Sanjay Malhotra announced the decision on Friday, citing the need for further review based on stakeholder feedback.

The proposal, introduced in July 2024, required banks to set aside an additional 5% ‘run-off factor’ on digitally accessible retail deposits. This measure aimed to enhance risk management amid potential large-scale withdrawals via internet and mobile banking.

Governor Malhotra stated that while an impact analysis had already been conducted, the central bank wanted to avoid disruptions caused by premature implementation. "We are reviewing the norms again based on feedback received," he said.

Banks had raised concerns over the policy's potential impact on credit costs, with estimates suggesting an increase of 0.5% to 1.75%. Financial institutions argued that such a requirement could tighten liquidity and affect lending capacities.

Initially planned for the 2025–26 financial year, the new deadline now aligns with the 2026–27 fiscal year. The RBI is also reassessing guidelines on expected credit loss and project financing, suggesting a broader review of banking regulations.

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The delay provides banks with additional time to adapt to the new framework while the RBI fine-tunes the policy to balance financial stability with operational feasibility.