Reserve Bank of India may need to pump in funds on liquidity crunch

GST payments and quarter-end credit demand may lead to such a situation

Funds flowing out because of advance tax payments and impending goods and services tax (GST) towards the end of the month may weigh on liquidity in the banking system.

The outgo on account of advance tax was Rs 1.16 trillion.

The rise in credit offtake at the close of the first quarter (Q1FY24) may also add to fund requirements, creating conditions for the Reserve Bank of India (RBI) to pump liquidity into the system, bankers said.

Soumyajit Niyogi, director, Core Analytical Group, India Ratings & Research, said the return of money into the system due to the withdrawal of Rs