Monday, 28 November 2016

RBI announces measures to drain excess liquidity

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With a move to managing the excess liquidity in the system banking regulator Reserve Bank of India announced on Saturday that it would absorb a part of this extra cash by applying an incremental cash reserve ratio (CRR) as a purely temporary measure. The CRR remains unchanged at 4 percent of outstanding net demand and time liabilities (NDTL). 

On the increase in NDTL between September 16, 2016 and November 11, 2016, scheduled banks shall maintain an incremental CRR of 100 percent, effective the fortnight beginning November 26, 2016, read the RBI note. This is intended to absorb a part of the surplus liquidity arising from the return of specified banking notes (SBN) to the banking system.

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