Banking system liquidity hits 3-year high at $3.74 trillion: RBI data

Banking system liquidity rose to a net surplus of Rs 3.74 trillion, the highest since June 2022. The market is now awaiting action from the RBI to manage the surplus and ensure monetary transmission

Banking system liquidity rose further to a net surplus of ₹3.74 trillion, highest since June 1, 2022, latest data by the Reserve Bank of India (RBI) showed.

 

The recent improvement in banking system liquidity can largely be attributed to higher government spending and lower-than-expected goods and services tax (GST) collections, which have eased the usual liquidity pressures. As a result, the liquidity drain was not as sharp as anticipated, dealers said, adding that with RBI already having reduced the Cash Reserve Ratio (CRR), its room for deploying other measures for liquidity withdrawal apart from variable rate reverse repo (VRRR) auction