Banks can boost liquidity by drawing down on CRR: RBI governor Das

The fall in the liquidity surplus is owing to multiple factors, including the RBI's interventions in the forex market and a sharp pick-up in bank credit growth, which is currently at nine-year highs

At a time when surplus liquidity in the banking system has shrunk considerably, banks can augment systemic liquidity by drawing down on excess cash reserve ratio and statutory liquidity ratio, Reserve Bank of India Governor Shaktikanta Das said on Friday.

From around Rs 8 trillion in early April, the liquidity surplus in the banking system has shrunk to around Rs 1 trillion in September, with the system even slipping into deficit during advance tax outflows earlier this month.

The fall in the liquidity surplus is owing to multiple factors, including the RBI’s interventions in the foreign exchange market and a