INSUBCONTINENT EXCLUSIVE:
Mumbai: Surplus cash in the banking system has surged to as much as Rs 4.74 lakh crore, surpassing liquidity levels seen four years ago
during the demonetisation period.
But, the liquidity glut is not bringing interest rates down, as risk-averse banks stay off from fresh
director Ashutosh Khajuria said
surplus, or liquidity, of Rs 4.41-4.74 lakh crore in the system in the second week of April, show data from the Reserve Bank of India.
A
surge in the benchmark bond yield, a key gauge to price any bonds, indicates that the high liquidity has failed to bring down rates on
longer-term papers.
The benchmark yield has gone up by 35 basis points since the unscheduled RBI policy meeting on March 27, pulling prices
However, that ability to lend is not percolating into keenness to lend owing to multiple uncertainties
than 200 basis points higher than equivalent sovereign papers.
The role of the central bank is now to restore market normalcy amid crisis,
then look for rate transmission, dealers said.
Bank certificates of deposit rate with 12-month maturity has jumped 28 basis points since
March 30, the day before the RBI cut its policy rate by a sharp 75 basis points, or 0.75 percentage point.
Most bank employees are now
working from home unless it is branch banking
Such a set-up has crippled normal banking activities
This has resulted in thinning business activities.
