RBI Governor Shaktikanta Das on Friday, while answering a question of liquidity deficit, said banking system liquidity went into deficit in the past 2-3 weeks due to factors such as scheduled GST, advance tax payments, and Rs 2,000 note withdrawal and it is not in deficit now. He further informed that since May 19, 2023, 87 per cent of Rs 3.43 lakh crore of Rs 2,000 notes have returned to banks and only Rs 12,000 crore of notes are yet to come back.
Addressing a presser after the RBI MPC announcements, RBI Governor Shaktikanta Das said, “Liquidity is not in deficit. It went into deficit in the last 2-3 weeks due to scheduled GST and advance tax payments. But overall, liquidity is surplus.” “We have announced the withdrawal of Rs 2,000 notes. So far, we have got back about 3.43 lakh crore, and about 12,000 crore are left. 87 per cent of it has come as bank deposits,” he further noted, as per ANI.
#WATCH | RBI Governor Shaktikanta Das says, “…We have announced the withdrawal of Rs 2,000 notes. So far, we have got back about 3.43 lakh crore and about 12,000 crore are left. 87 per cent of it has come as bank deposits…” pic.twitter.com/ODzErdysb2
— ANI (@ANI) October 6, 2023
The governor also added that government spending has picked up and will pick up and it will add further liquidity to the system. Further, the RBI Deputy Governor Michael Patra said that the liquidity management framework is robust.
“The incremental CRR was to deal with the liquidity situation created by the withdrawal of Rs 2,000 notes… The average call money rate for the month is 6.56 per cent, which is near the repo rate,” Patra said, reported Moneycontrol.
The amount of cash that is easily available at the banks to meet customers’ short-term financial and business demands is known as liquidity in the banking system. The banking system’s liquidity is stated to be in deficit on any given day if it is a net borrower from the RBI under the Liquidity Adjustment Facility (LAF).
In September, news agency Reuters reported that the RBI’s temporary liquidity withdrawal and tax outflows had an impact on bank financing, causing the Indian banking system’s liquidity to slip into a deficit for the first time since the end of March. The report citing RBI data said that the banking system’s liquidity had a deficit of Rs 236 billion ($2.84 billion) as of August 21. At the beginning of the month, the liquidity surplus reached a 13-month high of Rs 2.8 trillion.