BS EDIT: Managing Excess Liquidity: Financial Markets Need Clarity

By Business StandardPublished On Jul 11, 2025

India’s Liquidity Shift

From a ₹2 trillion deficit to a daily surplus of ₹3 trillion, raising concerns

RBI’s Liquidity Injection

RBI added ₹9.5 trillion and reduced CRR, increasing liquidity further

Excess Liquidity Risks

It could fuel inflation and asset-price inflation, despite controlled CPI

Lower Rates, Easy Credit

Excess liquidity lowers loan rates, raising concerns about credit quality

Shift to Debt Markets

Corporates are relying more on bonds, reducing dependence on banks

Managing Liquidity

RBI needs clear communication on managing rising liquidity risks