India's banks face a liquidity deficit of 2.43 trillion rupees, prompting calls for further monetary easing.

India's banking system faces a growing liquidity deficit, currently at 2.43 trillion rupees, due to tax payments and the Reserve Bank of India's foreign exchange interventions. Despite a recent cut in the cash reserve ratio, liquidity has slipped into deficit for the first time since June. Traders argue that further measures, such as additional cuts to the cash reserve ratio or bond purchases, are needed to avoid ineffective interest rate cuts in February. The deficit is expected to widen further in the next quarter.

3 months ago
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