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Banking system liquidity falls to Rs 2.17 lakh crore: Care Ratings

There could be improvement in the liquidity position with an upcoming OMO purchase aggregating Rs 15,000 crore by the RBI scheduled for March 24.

Banking system liquidity falls to Rs 2.17 lakh crore: Care Ratings

The liquidity in the banking system fell to Rs 2.17 lakh crore as on March 20, downRs 55,063 crore from a week ago on March 13. The outstanding liquidity fell from Rs 2.72 lakh crore as on March 13, on the back of advance tax payments, payments towards GST and other statutory tax payments by businesses during the week, said Care Ratings in a report. “However, lower credit offtake when compared with the deposit growth continued to support the liquidity in the banking system,” the rating agency said. The year-to-date credit growth from April 2019 to February 2020 stood at 3.4%, while the incremental bank deposit growth was at 6% during the period.

The five auctions of long-term repo operations (LTRO) undertaken by the RBI totalling Rs 1.25 lakh crore added to liquidity surplus during the week. The central bank also purchased government bonds amounting to Rs 10,000 crore through open market operations (OMO), enhancing the liquidity. During the week ended March 20, 2020, the daily net absorption by the RBI from the banking system, that is, the daily repo and reverse repo operations including the fresh term repo and reverse repo operations, widened from Rs 1.7 lakh crore on March 16 to Rs 2.23 lakh crore as on March 20, the agency said.

Further, there could be improvement in the liquidity position with an upcoming OMO purchase aggregating Rs 15,000 crore by the RBI scheduled for March 24. However, some year-end statutory tax payments may curtail the liquidity during the week, it added.

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First published on: 24-03-2020 at 09:31 IST