Insta
As Festival Season Kicks In, Banking Sector Liquidity Surplus Set To Improve Finds CARE Ratings
IANS
Sep 25, 2019, 03:12 PM | Updated 03:12 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
The net liquidity surplus in the banking system is likely to improve in the last week of September, though outflows from the banks will continue to meet festival demands and month-end requirements by corporates, CARE Ratings has said.
"On outlook on banking system liquidity for the September 23-27 week, the net liquidity surplus in the banking system is likely to improve from a week ago. At the same time, outflows from the banking system towards meeting festive demand, higher government borrowings and the fortnightly reporting of banks with the RBI and month-end fund requirements by corporates could also weigh in on banking system liquidity and limit the rise in the surplus," CARE Ratings said.
"Liquidity surplus in the banking system during the previous September 16-20 week declined to the lowest level since end June 2019 due to outflows towards tax payments (advance tax and GST) and higher government borrowings (net of T-bills maturity), though the overall liquidity was in surplus," the ratings agency said.
"Further pressuring the system liquidity was the higher quantum of currency with the public. It has witnessed a persistent increase since end August 2019 (an increase of Rs 0.26 lakh crore to Rs 22 lakh crore as of 13 September, 2019) purportedly on higher festive demand," it said.
"At the same time, the sustained low growth in incremental credit (during Apr-Aug'19) amid higher deposit growth helped sustain the liquidity surplus in the banking system. The net liquidity surplus during the 16-20 September week is estimated to have ranged between Rs 0.32-0.50 lakh crore, sharply lower than the estimated surplus of Rs 1.37-1.53 lakh crore of the preceding week.
"During the week, the daily net absorption by the RBI from the banking system i.e. the daily repo and reverse repo operations (including the fresh term repo and reverse repo auction and excluding the outstanding term repo and reverse repo operations), was lower than Rs 1 lakh crore throughout the 16-20 September week with the highest daily absorption being Rs 0.89 lakh crore," the analyst firm said.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Support Swarajya's 50 Ground Reports Project & Sponsor A Story
Every general election Swarajya does a 50 ground reports project.
Aimed only at serious readers and those who appreciate the nuances of political undercurrents, the project provides a sense of India's electoral landscape. As you know, these reports are produced after considerable investment of travel, time and effort on the ground.
This time too we've kicked off the project in style and have covered over 30 constituencies already. If you're someone who appreciates such work and have enjoyed our coverage please consider sponsoring a ground report for just Rs 2999 to Rs 19,999 - it goes a long way in helping us produce more quality reportage.
You can also back this project by becoming a subscriber for as little as Rs 999 - so do click on this links and choose a plan that suits you and back us.
Click below to contribute.