Current Affairs - Finance - Discussion

The Reserve Bank of India (RBI) has updated its Liquidity Coverage Ratio (LCR) framework to improve liquidity risk management and better align with global banking standards. A key revision includes the imposition of a 2.5% additional run-off factor on retail deposits enabled through digital platforms such as Internet Banking, Mobile Banking, and UPI. This percentage reflects the estimated portion of deposits that might be withdrawn during a period of financial stress, prompting banks to hold sufficient high-quality liquid assets. Initially, the draft guidelines proposed a 5% run-off, but after industry feedback, the final figure was reduced to 2.5%, offering relief to banks.