How RBI could tackle a liquidity deluge triggered by dollar deposits

The RBIs special dollar deposit scheme attracted a massive $127.23 billion, pushing Indias banking system liquidity surplus to a record ₹9.70 trillion. The central bank may deploy longer-term VRRR auctions, FX swaps, a market stabilisation scheme, CRR hikes or open-market bond sales to absorb excess liquidity and prevent inflationary pressures from building.

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