MUMBAI (Reuters) - India’s banking system liquidity deficit is at its widest in over four years ago, amid tax outflows and the lack of any major inflows, traders said on Wednesday.
REUTERS/Hemanshi Kamani/File PhotoBanking system liquidity deficit jumped to 1.47 trillion rupees ($17.67 billion) as on September 18, the highest single day shortfall since April 23, 2019, while banks have borrowed a record 1.97 trillion rupees from the central bank’s Marginal Standing Facility window.
Advance tax payments took place last week, while outflows towards Goods and Services tax will be completed by Wednesday, with bankers estimating aggregate outflows of up to 2.50 trillion rupees.
Moreover, “another drain on rupee liquidity could be from RBI’s (Reserve Bank of India) FX intervention if depreciation pressures on the rupee persist,” said Gaura Sen Gupta, an economist with IDFC First Bank.
The liquidity deficit will, however, narrow towards the end of this month and the beginning of October as government spending picks up and the I-CRR is completely wound down.
Persons:
Hemanshi, ”, Gaura Sen Gupta, Upasna Bhardwaj
Organizations:
REUTERS, Goods, Services, Reserve Bank of India, IDFC, Bank, Kotak Mahindra Bank
Locations:
MUMBAI, India, RBI’s