September 5 Holiday Explained: Centre Confirms Milad-un-Nabi; RBI Moves Bank Holiday to Sept 8

September 5 Holiday Explained: Centre Confirms Milad-un-Nabi; RBI Moves Bank Holiday to Sept 8

Why there was confusion over September 5 — and what the government and RBI actually decided

A viral claim on social media said India would shut down from September 3 to 6, 2025. That never existed. The Centre’s list shows only Friday, September 5, as a gazetted holiday for Milad-un-Nabi (Id-e-Milad), which marks the birth anniversary of Prophet Muhammad. Most states aligned with that date, though a few treated it as a restricted or optional holiday.

Then came a second twist — the bank holiday. The Reserve Bank of India had originally listed September 5 as a banking holiday in many states for Eid-e-Milad and, in Kerala’s case, for Onam/Thiruvonam. After requests from state governments and market participants, the RBI changed course. Banks were told to remain open on Friday, September 5, and instead observe the holiday on Monday, September 8, 2025. In short: Sept 5 is a public holiday for many government offices, but banks stayed open nationally; Sept 8 is now the effective RBI bank holiday.

Why the change? Practical concerns. In Maharashtra, September 5 coincided with final Ganesh immersion processions. The state chose to observe Id-e-Milad on September 8 to avoid a clash of large processions and staffing shortages. Market players also sought a smoother settlement calendar. The RBI responded by shifting the banking holiday so that Friday’s retail banking and payments were not disrupted, while allowing a unified market closure on Monday.

This decision matters because bank holidays are not the same as central government holidays. A gazetted holiday shuts central government offices and many public services, but banks follow the RBI’s schedule issued under the Negotiable Instruments Act. The RBI’s calendar can differ by state and can be revised, as it was here, to balance festivals, staffing, cash logistics, and financial market operations.

There’s another reason this period looks messy: lunar-based observances. Milad-un-Nabi can vary by a day across states depending on the moon sighting and local committee decisions. Onam in Kerala also comes with multiple festival dates (Thiruvonam being the peak day), which triggered a two-day state holiday window this year. Add in Ganesh immersions in Maharashtra, and you have overlapping events pulling in different directions.

What does the Monday shift do to markets? Government securities, foreign exchange, and money markets treat Monday, Sept 8, as a non-business day. That means trades don’t settle on that day. Settlement cycles slide accordingly. Friday, Sept 5, runs as a normal market day, which helps avoid end-of-week payment backlogs. Retail digital payments — UPI and NEFT — continue as usual, but instruments tied to market settlement, like certain treasury operations, follow the revised calendar.

One more nuance: state notifications. Some states had already notified Sept 5 as a holiday for Id-e-Milad or Onam. That doesn’t override the RBI’s national instruction to keep banking services open on Sept 5, but it can affect local branch availability and staffing. In practice, most major channels — ATMs, internet banking, mobile apps — ran normally, and core operations stayed on. A few branches may have worked with limited counters or followed local notices where applicable.

Here’s the clean version of the calendar most people need to remember: Friday, Sept 5 — many government offices closed, banks open nationally; Monday, Sept 8 — banks shut as per RBI, and key financial markets closed for settlement.

What this means for customers, businesses, and states

If you’re a retail customer, Friday was business as usual at bank branches and through digital channels. Monday, Sept 8, is the day you need to plan for. Expect branches to be closed and market settlements to pause. ATMs and digital payments should work as they do on typical bank holidays.

Cheque users should watch clearing cycles. Cheques lodged on Friday may move into clearing as normal. Items scheduled to clear on Monday will roll into the next working day. If you have rent, vendor payments, or EMIs that usually hit at the start of the week, check whether the debit date or settlement shifts by a day on your statement.

For businesses, the Monday holiday can nudge payrolls, vendor payouts, and high-value transfers. If your pay run depends on same-day branch actions or back-office approvals, move those to Friday or Tuesday. Treasury teams should note that money market and forex settlements won’t go through on Monday. If you hedge or roll positions, build in an extra day to avoid a funding gap.

Government-related payments typically allow for online remittances, but physical counters follow holiday schedules. If you rely on demand drafts, physical challans, or in-person bank attestations, avoid Monday. Digital routes are safer for time-sensitive dues.

For investors and traders, Monday is a non-settlement day in government securities, forex, and money markets. Plan collateral and margin use with the extra day in mind. Banks and custodians will adjust back-office runs to match the revised calendar. Friday’s continuity helps avoid end-of-week pile-ups, but the Monday pause still needs forecasting for cash and collateral.

State-by-state, here’s the broad picture based on official notifications shared ahead of the week:

• Maharashtra: The state marked Id-e-Milad on Monday, Sept 8, to avoid overlap with Ganesh immersion processions on Sept 5. Banks followed the RBI shift — open Friday, closed Monday — with Mumbai’s markets aligning to the Monday pause.
• Kerala: Onam led to holidays on Sept 4 and 5. Many local offices and institutions were shut on those dates. Banks remained open on Sept 5 as per the RBI’s national instruction, though some local operations were trimmed. Monday, Sept 8, is the banking holiday.
• Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Telangana, Jammu & Kashmir, and Delhi: These jurisdictions had notified Sept 5 for Id-e-Milad or Onam at various points. Banks were open on Friday nationally, but a few branches could have adjusted counters or timings due to local notices. Monday is the common banking holiday.
• Assam and Meghalaya: Sept 5 was treated as a restricted or optional holiday in several government offices. Banks followed the national instruction to remain open on Friday, and will close on Monday.

What about schools and government offices? Many central offices observed Friday, Sept 5, as a gazetted holiday for Milad-un-Nabi. States differed: some declared a full holiday, some kept it restricted or optional. Schools and colleges generally followed the state education department’s circulars, which varied by location and by festival.

If you’re trying to make sense of the labels: a “gazetted holiday” is on the central list and closes central government offices and many public institutions. A “restricted holiday” is optional — employees may choose it from a list. Bank holidays sit on a separate RBI list issued under the Negotiable Instruments Act and can be state-specific. That’s why you can have a central holiday with banks open, or a state festival day with national digital banking still live.

Practical tips if you have payments around these dates:

• For large transfers or time-bound dues, push them on Friday, Sept 5, or Tuesday, Sept 9. Avoid cutting it close to Monday.
• If you’re depositing cheques on Friday, confirm the expected clearing date with your branch or app.
• If you need in-person services — lockers, KYC updates, certified statements, DDs — do them before the weekend.
• UPI, cards, and net banking should work through the holiday. Still, keep a backup payment method handy.

If you trade, watch for revised settlement advisories from your broker or custodian. Monday’s pause affects cash and collateral flows tied to G-secs, money markets, and forex. Some cut-off times on Friday may have been pulled forward to smooth end-of-day processing before the weekend.

Why does this keep happening around festivals? India’s holiday map is layered — national, state, and local. Festivals tied to the lunar calendar can shift by a day and differ by region. The RBI’s job is to keep money moving with minimal disruption, while respecting local observances. That’s why you see surgical edits like shifting a bank holiday from a Friday to a Monday — it keeps branches open on a busy working day, protects market settlement integrity, and gives big cities like Mumbai room to manage multiple festivals safely.

Bottom line for this week: ignore the four-day shutdown rumour. September 5 was a central gazetted holiday for Milad-un-Nabi, not a nationwide bank shutdown. Banks stayed open on Friday, and the real banking break falls on Monday, September 8. Adjust your payments, travel, and paperwork around that single day.