"As we approach the busy season, it is time to access the expected liquidity balance in the banking system. The net borrowing programme has been completed to the extent of 84 per cent of the budgeted figure. If we add an estimated Rs 7,000 crore of borrowings by states,gross inflows exceed outflows by Rs 13,338 crore," the debt market report said.

The I-Sec report said that the considering the current macro economic outlook which looks somewhat better, the investment banking arm of ICICI said that it was expecting a 20 per cent growth in corporate offtake from the banking system in this fiscal. During the current fiscal till July 31, the outflow from the banking system on account of non-food credit and corporate investement was to the tune of Rs 4,100 crore while for the whole year the incremental outflow is expected to be Rs 68,000 crore.

I-Sec has estimated a Rs 1,00,000 crore increase in the deposit base in 1999-2000. "Growth till July 31 has amounted to Rs 31,485 crore. The balance Rs 70,000 crore is expected to ensure comfortable liquidity particularly as RBI can reduce 1-1.5 per cent of cash reserve ratio (CRR) as and when required and also resort to private placements during periods of temporary tightness. Further, an expected 20 per cent growth in corporate demand would most likely be coupled with strong portfolio and direct foreign flows implying robust deposit growth," the report said.

I-sec adds that as calendar 1999 draws to a close, concerns are being voiced about the possible impact on deposits due to Y2K. Growth in bank deposits may come down in the last quarter of the calendar year. "Also cash balances held by the baking sector may go up. This could have an adverse impact on liquidity," the report said.

The report added that the gross inflows appear comfortable this fortnight as well as the next fortnight. The overall liquidity appears to be balanced assuming Rs 7,500 crore auctions during this period and deposit accretion of about Rs 5,000 crore.