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Surplus liquidity in banking drops 43% due to advance tax payments
June 20, 2023
Surplus liquidity in the banking system declined 42.9 per cent to ₹1.04 lakh crore on June 18 from ₹1.82 lakh crore on June 11 due to advance tax payments.
On June 16, the surplus liquidity, as reflected by the amount of money absorbed by the Reserve Bank of India (RBI), fell to ₹85,479 crore after the June 15 deadline for advance tax payout.
The central bank’s net average daily surplus liquidity absorption from the system was ₹1.62 lakh crore between June 11 and June 15. It dropped to ₹96,393 crore between June 16 to June 18, as per the RBI data.
The central bank’s net average daily surplus liquidity absorption from the system was ₹1.62 lakh crore between June 11 and June 15. It dropped to ₹96,393 crore between June 16 to June 18, as per the RBI data.
“Liquidity in the banking system is the difference between incremental credit and deposits. The current fall in (surplus) liquidity is a case of deposits coming down because of advance tax payments,” said Madan Sabnavis, Chief Economist, Bank of Baroda. He said companies have drawn their deposits to pay advance tax.
Corporates or individuals are required to pay advance tax if their estimated tax liability, or the amount of tax to be paid, for the year is ₹10,000 or more. However, an individual not having any income from a business or profession is not liable to pay advance tax. The advance tax is paid in four different installments, with the first on June 15.
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