Banking system liquidity is now surplus at Rs 2.31 lakh crore. RBI was initially looking to infuse cash into the system, to counter the liquidity squeez this year. "RBI now cannot intervene beyond a point now as it will aggravate the sloshing liquidity in the system," said R K Gurumurthy, head of treasury, Lakshmi Vilas Bank . "The rupee could have gained another 1-2 percent this year if intensity of intervention had been lower.”India’s record high forex reserves of $455 billion is now well equipped to cover about 12 months of imports. High-street banks sold dollars to the RBI at a dollar-rupee exchange rate fixed by the central bank.

Source: Economic Times December 30, 2019 05:03 UTC