Banking system's liquidity slips into deficit for the first time in FY24

RBI governor had emphasised that the I-CRR move was temporary and that the central bank will ensure adequate liquidity in the system to fund the credit needs of the economy

The banking system's liquidity slipped into deficit for the first time in the current financial year (2023-24) due to the imposition of the Incremental Cash Reserve Ratio (I-CRR) for banks and outflows from goods and services tax (GST) payments, according to dealers.

Reserve Bank of India (RBI) data shows it injected Rs 23,644 crore on August 21. The last time liquidity was in deficit was on March 27, when the RBI injected Rs 45,575 crore. There is an expectation in the market that the development could prompt the RBI to announce a variable repo rate (VRR) auction to infuse liquidity.