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Banks park Rs 8.42 trn of surplus funds with RBI, hinting lending pause

The record amount is a worrying sign for the economy: either there is no demand for credit or banks are scared to lend.

Topics
Reserve Bank of India | repo rate | credit growth

Anup Roy  |  Mumbai 

Banks parked a record Rs 8.42 trillion of excess liquidity with the Reserve Bank of India (RBI) on Monday, indicating little demand for credit or lenders reluctance to disburse—signs that economic recovery will be difficult as the country battles the coronavirus pandemic. Banks have been periodically parking liquidity worth more than Rs 7 trillion, but Monday’s level can threaten the RBI’s balance sheet.

The RBI’s data, last published in August 2019, showed that it had roughly Rs 9 trillion of bonds in its books. The RBI has to give the bonds to banks, which may ...

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First Published: Tue, May 05 2020. 20:37 IST
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