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Liquidity boost from RBI’s CRR cut undermined by FX intervention and forward maturities
RBI’s CRR cut liquidity gets offset by FX intervention and forward maturities, dampening system surplus.
The RBI’s 100 bps cut in the cash reserve ratio (CRR) was intended to release ₹2.5 trillion liquidity, but so far only ~₹1.25 trillion has materialized. Analysts attribute the shortfall to concurrent FX interventions and forward maturities that drained excess system funds. The banking system briefly slipped into deficit. Further cover may come via open market operations or permanent liquidity tools if yields remain under stress.