RBI Plans to Update Liquidity Rules for Banks: The Reserve Bank of India (RBI) is gearing up to tweak its liquidity rules for banks. This move comes in response to global trends where customers are withdrawing their deposits on short notice, thanks to the rise of instant digital payments.
The current Liquidity Coverage Ratio (LCR) framework, put in place after the financial crisis, requires banks to keep a stash of high-quality liquid assets (HQLA) to cover expected cash outflows over the next 30 days.
Governor Shaktikanta Das stated, "With the emergence of new risks, it's essential to reassess our LCR framework. We're proposing some changes to help banks manage liquidity risk more effectively."
The RBI will soon release a draft circular for feedback from all stakeholders. This step aims to ensure transparency and gather insights from various players in the banking sector. Stay tuned for updates as the RBI works to refine its regulations in line with evolving market dynamics.
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