RBI's tighter liquidity norms may become credit positive for banks.

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Last month the central bank released a set of preliminary guidelines, which among other things contained a suggestion that banks will have to set aside 5% more the stability of those retail deposits which can be accessed through internet and mobile banking.

The Reserve Bank of India's latest draft instructions which are meant to empower banks to cater to liquidity problems when digital payments are on the rise are positive credit views.
The central bank of the country has announced the recommendations in the preliminary guidelines in the last month, which include the suggestion that banks will be required to allocate an additional 5% reduction in the stability of retail deposits in case of internet and mobile banking. 
These, however, will exist amongst the 15 point falls in the liquidity coverage ratios (LCR) of banks.
LCR, which is a liquidity regulation that requires banks to keep a portion of high-quality liquid assets such as cash, reserves with central banks, and federal government bonds, which can easily be converted into cash whenever needed.
The probable limitation of the liquidity norm is a good thing as it will make the banks more solid and will also enhance liquidity buffers.
The amount of the reduction of LCR will be placed on the balance of retail and small business deposits available to IMB operations that can be.
Bank of Baroda a state-owned lender thinks its liquidity coverage ratio will go down by 12-15 percentage points from the present 138% its CEO said on Thursday in an interview with Reuters.

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