Page 7 - Banking Finance August 2025

BANK UPDATE

Banking System Liquidity Surplus Crosses Rs. 4 Tril- Attention Subscribers
lion Mark Please renew your Subscription of The
The banking system's liquidity surplus has soared to Rs. 4.04 trillion, the high- Insurance Times Journal to receive
est since May 19, 2022, as per data from the Reserve Bank of India's (RBI) copy of the journal uninterruptedly.
Liquidity Adjustment Facility (LAF). This sharp rise is attributed primarily to
You can now pay by GPAY, Phonepe,
increased government expenditure following the RBI's record Rs. 2.69 tril-
Paytm, Amazon, ICICI Pay, BHIM UPI
lion surplus transfer in May.
During the recent seven-day Variable Rate Reverse Repo (VRRR) auction,
the RBI received bids worth approximately Rs. 1.7 trillion, significantly ex-
ceeding the notified Rs. 1 trillion. Ultimately, the RBI accepted Rs. 1 trillion
at a cut-off rate of 5.47%. This contrasts with the previous week's auction,
which attracted bids of just Rs. 84.98 crore due to the quarter-end timing,
which typically affects liquidity availability.

Commenting on the trend, V R Reddy, Head of Treasury at Karur Vysya Bank,
noted that the current liquidity environment is more favorable and that
surplus levels are expected to remain above Rs. 4 trillion in the near term,
supported by continued fiscal activity and robust capital flows.

crore in 1955 to Rs 70,901 crore in of average monthly balance (AMB) in
FY25 - a staggering 52,000-fold in- savings accounts, aiming to retain cus-
crease. tomers amid falling interest rates and
rising competition from alternative in-
Over the same period, deposits grew
vestments. With the RBI having cut the
25,000 times to Rs 53.82 lakh crore,
repo rate by 100 basis points, banks
and advances rose 35,800 times to Rs
are reducing both savings and fixed
41.63 lakh crore. The number of em-
deposit rates.
ployees grew 16.4 times to 2.36 lakh,
while profit per employee jumped 33 As of June 20, 2025, the average sav-
times to Rs 29.91 lakh. SBI now con- ings account rate has dropped to 2.50- Sashi Publications Easy Payment
tributes 1.1% to global GDP growth 2.75% from 2.70-3% a year ago, while Modes :-
and 16% to India's GDP, with a balance one-year term deposit rates now i) UPI ID: SASHIBOOKS@KOTAK
sheet larger than the GDP of 175 coun- range between 5.85-6.70%. Banks ii) GPAY: 9830171022@okbizaxis
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Bank, and Indian Bank have recently
It currently holds 22.5% of India's iv) NEFT: Current A/C
waived AMB penalties; SBI did so back
scheduled commercial bank deposits 402120110000327 of 'SASHI
in 2020. While this move may reduce
and 19.4% of the credit. SBI operates PUBLICATIONS PRIVATE
fee income, it helps banks retain CASA
22,937 domestic branches and 244 LIMITED, Bank of India, VVK
(Current Account and Savings Account)
overseas offices, and 27.6% of its Road Branch., Kolkata, India,
deposits and ease interest costs.
workforce is women. IFSC Code : BKID0004021
Experts warn, however, that this could
v) Credit Card:
PSBs Waive AMB Penalties lead to a rise in dormant accounts. www.sashipublications.com
Karur Vysya Bank's treasury head
Amid Falling Interest Rates noted that banks are compensating For any query please call
Public Sector Banks (PSBs) have begun with added non-monetary benefits to 9073791022/9883398055
waiving penalties for non-maintenance retain customer engagement. www.sashipublications.com

BANKING FINANCE | AUGUST | 2025 | 7