Higher FCNR(B) inflows are complicating the Reserve Bank's liquidity management. The banking system currently holds excess liquidity at a four-year high. Economists anticipate the RBI will deploy additional tools to absorb surplus funds. These measures may include variable rate reverse repo operations and incremental CRR hikes. Forex reserves have reached a record high of USD 729.3 billion.

RBI conducts VRRR auctions to manage ₹6.65 lakh crore liquidity surplus from robust FCNR (B) deposit inflows.

Banking system liquidity has reached a four-year high as FCNR(B) inflows entered the market. This excess liquidity has pushed the weighted average call rate significantly below…

Banks mobilized over $127 billion from FCNR(B) deposits by August 31. Total dollar inflows reached $136.37 billion through special schemes. The FCNR(B) scheme alone accounted…