Liquidity In The Banking System Rises Further

The outstanding liquidity in the banking system widened further during the week ending December 4, 2020, CARE has stated in its latest report.

"The outstanding liquidity aggregated Rs. 5.82 lakh crore as on December 4, 2020, Rs. 45,806 crore higher than Rs. 5.36 lakh crore as on November 27, 2020. The liquidity surplus has scaled Rs 6.23 lakh crs on December 3, 2020, its highest level since the period the banking system has been in liquidity surplus (May'2019). The sustained liquidity surplus in the banking system can be attributed to the deposit growth persistently surpassing the bank credit growth.

The incremental bank deposit growth was at 5.9%, higher than the incremental bank credit growth by 0.6% as on November 20, 2020. The RBI's durable liquidity infusion measures via OMO purchases have also supported liquidity in the banking system. So far this fiscal, the RBI has undertaken total OMO purchases of Rs 3.27 lakh crores while OMO sales of Rs 99,900 crores (including simultaneous purchase and sale of OMOs). Aggregate government borrowings of Rs 34,930 crs (central government: Rs. 22,000 crore, state government: Rs. 12,930 crs) capped the upside of the banking system liquidity surplus," the rating agency has stated in its latest report.