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RBI's new norms can bring more efficiency in a bank's liquidity management

The framework is proposing that system liquidity should ideally be kept in deficit mode of 0.25-0.50 per cent of the deposit base

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Anup Roy Mumbai
Doing away with assured liquidity for the banking system, as proposed by an internal group of the Reserve Bank of India (RBI), can bring more efficiency in a bank’s liquidity management.

In the current framework, the RBI assures liquidity of up to 1 per cent of the deposit base — 0.25 per cent for individual banks and 0.75 per cent for the overall system.

Now the framework is proposing that system liquidity should ideally be kept in deficit mode of 0.25-0.50 per cent of the deposit base.
 
It is important to mention here is that banking system liquidity is highly

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First Published: Sep 27 2019 | 10:53 PM IST

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