Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Charts & Analysis

Chart Of The Day: Liquidity Of The Banking System

I spoke of the Marginal Standing Facility recently, and today we take a look at liquidity in terms of how much banks are borrowing from the RBI overnight:

image

Over the weekend the Repo requirement was 1.73 lakh crores, a very very high amount. (total deposits in the system are about 57 lakh crores, so this is 3% of that, which is quite high). RBI expects that repo be 1% of total deposits (called “Net Demand and Time Liabilities”) to be “comfortable”.

However, it is not uncommon for liquidity requirements to spike in December, since much of the money that is paid as advance tax sits in the Government account with RBI and needs to be spent to come back into the system. The current situation may just be temporary.

The MSF has been seeing offtake recently as well – as discussed, it is beyond repo as well. Announced one day after (unlike Repo/Rev Repo which are announced the same day), the MSF has reached nearly 10,000 cr. of borrowing.

image