Certificates of deposit jump from Rs 56,271 crore to Rs 1.15 lakh crore
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
Liquidity management and banking sector dynamics: a relevant GS3 Economy topic.
Why in news
Reserve Bank of India data revealed a significant surge in Certificates of Deposit (CDs) and FCNR-Bank deposits, indicating shifting liquidity patterns among major Indian banks.
Background
Certificates of deposit rose from Rs 56,271 crore in August to Rs 1.15 lakh crore in September. Between June and August, banks garnered $133 billion through FCNR-Bank deposits, with Punjab National Bank raising $2.7 billion and Indian Bank raising $2.3 billion.
Facts for Prelims
- FactCertificates of deposit reached Rs 1.15 lakh crore in September
- FactPunjab National Bank raised $2.7 billion through FCNR-Bank deposits
- FactIndian Bank raised $2.3 billion through FCNR-Bank deposits
Prelims practice question
What was the total value of FCNR-Bank deposits garnered by banks between June and August?
- (a)$100 billion
- (b)$133 billion
- (c)$200 billion
- (d)$150 billion
Show answer
Answer: (b) $133 billion — The note states that banks garnered $133 billion through FCNR-Bank deposits between June and August.
For Mains
Q. Analyze the significance of Certificates of Deposit and FCNR-Bank deposits in managing bank liquidity and managing external shocks to the Indian banking system.
Dimensions to cover in your answer
- Liquidity management: Use of CDs as short-term instruments to bridge maturity mismatches
- External stability: Role of FCNR deposits in mitigating currency volatility and managing capital outflows
Keywords: liquidity management · Certificates of Deposit · FCNR-Bank deposits · monetary stability · banking sector
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