Stories
RBI expects banking system surplus liquidity to decline in coming months
- •RBI Governor Sanjay Malhotra stated that surplus liquidity in the banking system is expected to decline over the next few months.
- •Out of Rs 10 lakh crore in durable liquidity, only Rs 3.5 lakh crore is actually available for banks due to government balances and other factors.
- •The central bank expects the weighted average call money rate to align closely with the policy repo rate soon.
- •Malhotra defended the early closure of the FCNR(B) deposit window, noting that expected inflows of roughly $150 billion across three schemes are sufficient.
- •Recent RBI measures, including forex curbs and dollar-supply windows, aim to manage market pressures from crude oil prices and capital outflows.
Key Questions Answered
RBI Governor Sanjay Malhotra expects surplus liquidity in the banking system to decline over the next few months, noting that only Rs 3.5 lakh crore of the Rs 10 lakh crore in durable liquidity is available for banks. He added that this temporary surplus will not worsen credit quality or fuel inflation.
RBI Governor Sanjay Malhotra defended the early closure by stating that expected inflows of roughly $150 billion across all three foreign-currency mobilisation schemes were substantial. The FCNR(B) window closed to fresh eligible deposits on August 31 after mobilising $132.98 billion.
The Reserve Bank of India raised the daily cash reserve ratio (CRR) maintenance requirement for banks from 90 percent to 99 percent effective October 16. This adjustment reduces banks' day-to-day reserve flexibility to help manage systemic liquidity conditions.
