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The banking system, after enjoying a liquidity surplus for over two months, is expected to move into deficit this week due to advance tax payments and GST outflows, according to market experts. As of Thursday, the liquidity surplus stood at Rs 1.96 trillion, based on data from the RBI. "The liquidity will dip into deficit following the advance tax payments and GST outflows. However, we expect a rebound in October with government spending," said the chief economist at Bank of Baroda. In August,
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FAQ :
Banking liquidity is expected to decline from a surplus to a deficit due to outflows for advance tax payments and Goods and Services Tax (GST).
The banking system has enjoyed a liquidity surplus for over two months.
A rebound in liquidity is expected in October, with government spending anticipated to boost the surplus.
Bond market participants predict minimal impact on short-term bond yields, partly due to the cancellation of treasury bill auctions in September.
The RBI manages liquidity by balancing both infusion and withdrawal as needed, ensuring rates remain stable despite fluctuations in surplus levels.
The weighted average money market rate hovered just below the repo rate of 6.50%, settling at 6.47% on Friday.
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