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Advanced tax payments push the banking system liquidity into deficit
September 20, 2023
Liquidity in the banking system slipped into deficit mode once again ahead of the second tranche of Incremental Cash Reserve Ratio (I-CRR) disbursement on September 23, due to tax outflows, dealers said.
The Reserve Bank of India (RBI) injected ₹45,699 crore on Friday, ₹68,785 crore on Saturday and ₹67,576 crore on Sunday.
“The estimates are that around ₹90,000 crore to ₹1 trillion will go out as goods and services tax (GST) outflow,” a dealer at a primary dealership said.
“The deficit liquidity should not persist as government spending is scheduled in the later part of the month. It should bring the surplus liquidity back to Rs 1 trillion,” he added.
Surplus liquidity in the banking system went into deficit mode for the first time in the current financial year on August 21. This was on the back of I-CRR and GST payments.
The RBI had decided on September 8 to discontinue the I-CRR by October 7, in a phased manner.
Out of the total I-CRR maintained, 25 per cent will be disbursed on September 29, another 25 per cent on September 23, and the remaining 50 per cent will be released on October 7.
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