INVC NEWS
New Delhi : The recent cash shortage in Indian banks has sent ripples across the nation. On December 25th, the banking system witnessed a staggering shortage of approximately 2.67 lakh crore rupees. This scarcity of cash marks the most severe situation observed since March 2016, according to Bloomberg data.
Diving into the Numbers
To comprehend the gravity of the situation, let’s rewind to March 16, 2016, when banks faced a cash shortage of 2.63 lakh crore rupees. While it’s common for banks to experience a cash crunch at the end of each quarter, the current deficit is unprecedented in scale.
Unprecedented Cash Shortage: A Closer Look
Ordinarily, banks grapple with a cash shortage at the end of every quarter, but the current deficit is unparalleled. The situation prompted the Reserve Bank of India (RBI) to intervene and extend a helping hand to the struggling banks. By December 22nd, the RBI had injected a financial lifeline of 1.75 lakh crore rupees.
RBI’s Intervention
In a bid to alleviate the cash woes, the RBI conducted a variable rate repo auction, where banks placed bids totaling 4.26 lakh crore rupees. The RBI accepted bids at interest rates of 6.68% and 6.70%, injecting a total of 1,75,013 crore rupees into the system. This move aimed to counterbalance the 4.26 lakh crore rupees demanded by the banks.
The Concerns and the Road Ahead
The cash scarcity has not only affected the banks but has also raised concerns at the RBI. As we navigate the complexities of this unprecedented situation, it becomes evident that the RBI is actively working to find sustainable solutions.
Cash shortage
In conclusion, the recent cash shortage in Indian banks has sparked concerns and prompted swift action from the Reserve Bank of India. As we navigate the intricacies of this unprecedented situation, it is clear that a multi-faceted approach is necessary to address the challenges at hand. The coming days will undoubtedly shed light on the effectiveness of the measures taken and the resilience of the banking system.
