The 11 public sector banks (PSBs) under prompt corrective action (PCA) were partly responsible for a liquidity scare in September. The restrictive framework of the Reserve Bank of India (RBI) meant that banks had restrictions on how to deploy their money, and at the same time remain high on liquid assets. Therefore, when the IL&FS saga erupted, these banks liquidated their mutual fund holdings and put the money back with the RBI.
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