Liquidity in the banking system has eased as is evident from the decline in the borrowing of banks through Reserve Bank of India’s (RBI) liquidity adjustment facility (LAF).
Money market participants feel that the easing liquidity may be because the government has already started spending.
On a recent day, banks borrowed Rs 10,880 crore through RBI’s LAF and this is sharply lower than over Rs 100,000 crore drawn by banks some weeks ago.
Going forward, analysts expect liquidity deficit in the system to remain in the range of Rs 50,000 -75,000 crore, which still remains under RBI’s comfort zone. The deficit may expand on account of leakages in the currency market,” he said.
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