&w=3840&q=100)
Banking system liquidity surplus tops ₹4 trillion; strong VRRR demand
Mumbai
Listen to This Article
The liquidity surplus in the banking system, measured by banks parking funds in the Reserve Bank of India's liquidity adjustment facility (LAF), surged to ₹4.04 trillion on Thursday, the highest since 19 May 2022.
The surge in liquidity is mainly due to increased government spending following a record surplus transfer by the central bank—₹2.69 trillion—in May.
RBI conducted a 7-day Variable Rate Reverse Repo (VRRR) auction for which it received bids worth ₹1.7 trillion against the notified amount of ₹1 trillion. The central bank accepted ₹1 trillion at a cut-off rate of 5.47 per cent.
The bidding was significantly higher
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
12 minutes ago
- Mint
Can AI wrongly flag legitimate transactions as ‘suspicious'? RBI flags key concerns in latest report
In its latest report, the Reserve Bank of India (RBI) has flagged some concerns relating to the impact of artificial intelligence on the world of finance. The report says that automation can potentially amplify faults across high-volume transactions. For example, an AI-powered fraud detection system that incorrectly flags legitimate transactions as suspicious or fails to detect actual fraud due to model drift can cause financial losses and reputational damage, as mentioned in RBI's FREE-AI Committee Report, Framework for Responsible and Ethical Enablement of Artificial Intelligence. Another danger that the RBI's report proposes relates to the credit scoring model. It says that a credit scoring model that depends on real-time data feeds could fail on account of data corruption in upstream systems. While emphasising the importance of monitoring, it says that if monitoring is not done consistently, AI systems can degrade over time, delivering sub-optimal or inaccurate outcomes. The Financial Stability Board (FSB) has also highlighted that artificial intelligence can reinforce existing vulnerabilities. One of such concerns is where AI models, learning from historical patterns, could reinforce market trends, thereby exacerbating boom-bust cycles. When multiple institutions make use of similar AI models or strategies, it could lead to a herding effect where synchronised behaviours could magnify market volatility and stress. Excessive dependence on AI for risk management and trading could expose institutions to model convergence risk, just as dependence on analogous algorithms could undermine market diversity and resilience. The opacity of AI systems could make it difficult to predict how shocks transmit through interconnected financial systems, especially at times of crisis. AI deployments blur the lines of responsibility between various stakeholders. This difficulty in allocating liability can expose institutions to legal risk, regulatory sanctions, and reputational harm, particularly when AI-driven decisions affect customer rights, credit approvals, or investment outcomes. For example, if an AI model shows biased outcomes due to inadequately representative training data, questions may arise as to whether the responsibility lies with the deploying institution, the model developer, or the data provider. For all personal finance updates, visit here
Economic Times
14 minutes ago
- Economic Times
From same day credit to credit within hours, how RBI is revolutionising cheque clearance process
ET Online Now, get cheques cleared and credited on the same day, RBI introduces continuous clearing and settlement In a bid to speed up the cheque processing time from the current T+1 settlement period, RBI has announced that starting October 1, 2025, cheque handling will move away from the existing batch clearing method to continuous clearing with settlement on realisation. This will be implemented in 2 phases, with the first phase will start from October 4, 2025 and run until January 2, 2026. The phase 2 will kick off on January 3, 2026. 'It has been decided to transition CTS to continuous clearing and settlement on realisation in two phases. Phase 1 shall be implemented on October 4, 2025 and Phase 2 on January 3, 2026', the directive noted. Read on to know more about how this will impact cheque settlement in the country. How are cheques cleared at present? Currently, banks use the CTS, or Cheque Truncation system to process cheques. This system eliminates the need to physically transfer paper cheques between banks, which can take a lot of time. Instead, on the same day, it captures an electronic image along with other important details of the cheque and sends it to the drawee bank, the one responsible for paying the amount specified on the cheque. The return cycle is completed the next day, after which the settlement takes place. Once the settlement process is done, the customer receives their funds. In other words, all this takes place within a day or two after the cheque is deposited. But, moving forward, cheques will be cleared in just a few hours, and usually on the same day if deposited during business hours. What will change with cheque processing starting October 4? There will be a single presentation session from 10 am to 4 pm, but the confirmation session will run from 10 am to 7 pm. This is an internal process for banks to handle and confirm cheques. 'Cheques received by the branches shall be scanned and sent to the clearing house by the banks immediately and continuously during the presentation session', the circular added. The clearing house will release the cheque images to drawee banks on a continuous basis. Once they get the cheque image, the drawee banks will then be required to process the cheques continually and in real-time. They also will have to let the clearing house know if the cheque was honoured or dishonored immediately after processing. So for every cheque presented, the drawee bank will either provide a positive confirmation for honoured cheques, or negative confirmation for dishonoured ones. 'Each cheque will contain the 'Item Expiry Time' which indicates the latest time by which confirmation for the presented instrument needs to be provided by the drawee bank', it added. During phase 1, this time has been set at 7 pm. As explained in the directive, 'During phase 1 (From October 4 to January 2, 2026), drawee banks shall be required to confirm (positively / negatively) cheques presented on them latest by end of confirmation session (i.e. 7:00 PM)'. It also adds that in the absence of any confirmation, the cheque will be 'deemed to have been approved and included for settlement'. What will change starting January 2026? During phase 2, 'settlement will be arrived every hour till the end of confirmation session, based on the positive confirmations received from drawee banks and cheques considered deemed approved', adds the circular. Effective January 2026, the item expiry time of cheques will also change from 7 pm to T+3 hours. This means that any cheque that has been presented for clearing at 11 am and 12 noon on a given day, will have to be confirmed either positively or negatively by 3 pm i.e. 3 hours from 12 noon. If the drawee bank does not provide confirmation for any cheque within these 3 hours, they will be deemed to have been positively confirmed for settlement. How will this impact payments? Once the clearing house releases information whether the cheque has been cleared or not, the presenting bank shall credit funds to the customers account immediately, but no later than 1 hour. N.R. Narayana Murthy Founder, Infosys Watch Now Harsh Mariwala Chairman & Founder, Marico Watch Now Adar Poonawalla CEO, Serum Institute of India Watch Now Ronnie Screwvala Chairperson & Co-founder, upGrad Watch Now Puneet Dalmia Managing Director, Dalmia Bharat group Watch Now Martin Schwenk Former President & CEO, Mercedes-Benz, Thailand Watch Now Nadir Godrej Managing Director, of Godrej Industries Watch Now Manu Jain Former- Global Vice President, Xiaomi Watch Now Nithin Kamath Founder, CEO, Zerodha Watch Now Anil Agarwal Executive Chairman, Vedanta Resources Watch Now Dr. Prathap C. Reddy Founder Chairman, Apollo Hospitals Watch Now Vikram Kirloskar Former Vice Chairman, Toyota Kirloskar Motor Watch Now Kiran Mazumdar Shaw Executive Chairperson, Biocon Limited Watch Now Shashi Kiran Shetty Chairman of Allcargo Logistics, ECU Worldwide and Gati Ltd Watch Now Samir K Modi Managing Director, Modi Enterprises Watch Now R Gopalakrishnan Former Director Tata Sons, Former Vice Chairman, HUL Watch Now Sanjiv Mehta Former Chairman / CEO, Hindustan Unilever Watch Now Dr Ajai Chowdhry Co-Founder, HCL, Chairman EPIC Foundation, Author, Just Aspire Watch Now Shiv Khera Author, Business Consultant, Motivational Speaker Watch Now Nakul Anand Executive Director, ITC Limited Watch Now RS Sodhi Former MD, Amul & President, Indian Dairy Association Watch Now Anil Rai Gupta Managing Director & Chairman, Havells Watch Now Zia Mody Co-Founder & Managing Partner, AZB & Partners Watch Now Arundhati Bhattacharya Chairperson & CEO, Salesforce India Watch Now
Time of India
15 minutes ago
- Time of India
From same day credit to credit within hours, how RBI is revolutionising cheque clearance process
How are cheques cleared at present? What will change with cheque processing starting October 4? What will change starting January 2026? How will this impact payments? In a bid to speed up the cheque processing time from the current T+1 settlement period, RBI has announced that starting October 1, 2025, cheque handling will move away from the existing batch clearing method to continuous clearing with settlement on will be implemented in 2 phases, with the first phase will start from October 4, 2025 and run until January 2, 2026. The phase 2 will kick off on January 3, 2026.'It has been decided to transition CTS to continuous clearing and settlement on realisation in two phases. Phase 1 shall be implemented on October 4, 2025 and Phase 2 on January 3, 2026', the directive on to know more about how this will impact cheque settlement in the banks use the CTS, or Cheque Truncation system to process cheques. This system eliminates the need to physically transfer paper cheques between banks, which can take a lot of time. Instead, on the same day, it captures an electronic image along with other important details of the cheque and sends it to the drawee bank, the one responsible for paying the amount specified on the return cycle is completed the next day, after which the settlement takes the settlement process is done, the customer receives their funds. In other words, all this takes place within a day or two after the cheque is moving forward, cheques will be cleared in just a few hours, and usually on the same day if deposited during business will be a single presentation session from 10 am to 4 pm, but the confirmation session will run from 10 am to 7 pm. This is an internal process for banks to handle and confirm cheques.'Cheques received by the branches shall be scanned and sent to the clearing house by the banks immediately and continuously during the presentation session', the circular clearing house will release the cheque images to drawee banks on a continuous they get the cheque image, the drawee banks will then be required to process the cheques continually and in real-time. They also will have to let the clearing house know if the cheque was honoured or dishonored immediately after for every cheque presented, the drawee bank will either provide a positive confirmation for honoured cheques, or negative confirmation for dishonoured ones.'Each cheque will contain the 'Item Expiry Time' which indicates the latest time by which confirmation for the presented instrument needs to be provided by the drawee bank', it added. During phase 1, this time has been set at 7 explained in the directive, 'During phase 1 (From October 4 to January 2, 2026), drawee banks shall be required to confirm (positively / negatively) cheques presented on them latest by end of confirmation session (i.e. 7:00 PM)'.It also adds that in the absence of any confirmation, the cheque will be 'deemed to have been approved and included for settlement'.During phase 2, 'settlement will be arrived every hour till the end of confirmation session, based on the positive confirmations received from drawee banks and cheques considered deemed approved', adds the January 2026, the item expiry time of cheques will also change from 7 pm to T+3 hours. This means that any cheque that has been presented for clearing at 11 am and 12 noon on a given day, will have to be confirmed either positively or negatively by 3 pm i.e. 3 hours from 12 the drawee bank does not provide confirmation for any cheque within these 3 hours, they will be deemed to have been positively confirmed for the clearing house releases information whether the cheque has been cleared or not, the presenting bank shall credit funds to the customers account immediately, but no later than 1 hour.
