Cash availability in the banking system has improved dramatically. In mid-December, after the advance tax outflow, the liquidity shortage in the banking system was as high as Rs 1.7 lakh crore. Today the shortage has dropped to Rs 62,000 crore. CNBC-TV18's Gopika Gopakumar delves deeper on how has this liquidity improvement occurred.
Slower government spending and sluggish deposit growth could be attributed as the main factors that led to liquidity shortage in the system. Banks borrowed as much as Rs 1.7 lakh crore from the Reserve Bank of India's (RBI) repo window on December 23, which was largely to meet advance tax payments. However, it now looks like this money is coming back into the system. Bank borrowing from the RBIDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
