👁️
Post Views: 124,060
[ad_1]
MUMBAI: The banking system may still face liquidity pressure next week because many believe that RBI will not completely remove the additional cash reserve ratio (CRR) requirement it imposed on banks in its August monetary policy.
Dealers expect the central bank to announce a phased withdrawal instead of a full reversal while conducting a review of the CRR on Friday. Last month, RBI imposed a 10% additional CRR on incremental deposits raised by banks between May 19 and July 28. This move absorbed nearly Rs 1 lakh crore of deposits. The rationale was that it was necessary to absorb the additional deposits resulting from the withdrawal of Rs 2,000 notes. The measure was subject to review on September 8.
On Wednesday, PNB announced a 25-basis-point increase in term deposit rates, offering 6.8% on one-year deposits – suggesting that the bank does not anticipate a sudden increase in liquidity. While the average system liquidity surplus was lower at Rs 1.2 lakh crore in August 2023 compared to Rs 1.6 lakh crore in July 2023, surplus funds are gradually increasing. Given the high inflation, many money market dealers expect RBI to ease the additional CRR in a phased manner.
Dealers expect the central bank to announce a phased withdrawal instead of a full reversal while conducting a review of the CRR on Friday. Last month, RBI imposed a 10% additional CRR on incremental deposits raised by banks between May 19 and July 28. This move absorbed nearly Rs 1 lakh crore of deposits. The rationale was that it was necessary to absorb the additional deposits resulting from the withdrawal of Rs 2,000 notes. The measure was subject to review on September 8.
On Wednesday, PNB announced a 25-basis-point increase in term deposit rates, offering 6.8% on one-year deposits – suggesting that the bank does not anticipate a sudden increase in liquidity. While the average system liquidity surplus was lower at Rs 1.2 lakh crore in August 2023 compared to Rs 1.6 lakh crore in July 2023, surplus funds are gradually increasing. Given the high inflation, many money market dealers expect RBI to ease the additional CRR in a phased manner.
[ad_2]
Source link
