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Reserve Bank of India (RBI) Governor Shaktikanta Das has clarified the status of the draft guidelines on the Liquidity Coverage Ratio (LCR) for banks, emphasizing that the proposal is still under discussion and has not yet led to an increase in liquidity requirements. His comments were made during a press briefing on Wednesday, addressing speculation and concerns within the banking sector.
Governor Das said that with regard to the LCR, or liquidity coverage, which the banks are expected to maintain, it’s a draft which the bank have put out in the public domain. He noted that the draft is currently open for public feedback, and the RBI is actively seeking inputs from all relevant stakeholders, including banks and financial experts.
The LCR is a crucial regulatory measure designed to ensure that banks hold an adequate level of high-quality liquid assets to cover their net cash outflows over a 30-day stress period. The draft guidelines aim to enhance the resilience of the banking sector by fortifying its liquidity risk management framework.
“We will get inputs from all the stakeholders, including the banks and all the experts. Based on that, we will finalize and make our decision,” Das added, underscoring the collaborative approach of the RBI in formulating these guidelines. This consultative process aims to incorporate diverse perspectives to ensure the regulatory framework is both robust and practical.
Governor Das addressed concerns about the potential impact of the new guidelines on the banking sector, clarifying that it is premature to claim that liquidity requirements have been increased. “So far, it is not correct to say that we have increased the liquidity requirements as it is still under discussions,” he stated, emphasizing that any changes will be made only after thorough deliberation and consideration of stakeholder feedback.
The clarification from the RBI Governor aims to alleviate uncertainty within the financial sector, as banks assess the implications of the proposed LCR guidelines. Analysts have welcomed the transparent approach, noting that stakeholder engagement is essential for effective regulatory reform.