The Reserve Bank of India is flush with cash as banks have deposited a huge Rs 4.32 lakh crore of their excess liquidity with the central bank. This follows the unprecedented instances of public depositing the banned currency notes in the banks. Before the demonetization, banks normally used to deposit under Rs 5,000 crore of their excess cash at RBI’s reverse repo window. However, on 22 November, the banks have, netting off for borrowings, parked a record Rs 4.32 lakh crore with RBI. This figure is likely to go up in the coming days as people are still continuing to deposit their old currency notes at banks and the government has given time till 30 December to do so. On the other hand, the government has also put restrictions on withdrawals. RBI would have by this time offered bonds to banks worth this amount.
