Major lenders to urge RBI to delay April liquidity rule

SOME OF LARGE lenders are planning to request concessions from the new head of the Reserve Bank of India (RBI) regarding proposed liquidity regulations, arguing the rules could hamper efforts to boost lending, according to people familiar with the developments.

- BHASKAR DUTTA

Banks plan to urge the RBI to delay the implementation of the new liquidity coverage ratio (LCR) norms, due to take effect on April 1, sources said. The request will be made through the Confederation of Indian Industry, which will meet recently-appointed RBI governor Sanjay Malhotra soon, they said.

The tighter norms, announced in July by former RBI governor Shaktikanta Das, mandate banks to park a larger portion of their deposits in sovereign bonds as a buffer against sudden withdrawals in the age of digital banking. However, implementing them would add to the challenges faced by lenders already grappling with a cash squeeze in the banking system.