banking service chronicle Published this BANKING SYSTEM LIQUIDITY Why in News? After remaining in surplus mode since May 2019 the Indian banking system liquidity turned into a deficit mode in September 2022. About Banking System Liquidity and its SignificanceBanking System Liquidity refers to readily available cash that banks need to meet shortterm business and financial needs It is understood through Liquidity Adjustment Facility (LAF) the primary instrument of the RBIs operations to inject or absorb liquidity into the banking system.banking service chronicle magazine On a given day if the banking system is a net borrower from the RBI under LAF the system liquidity can be said to be in deficit and if the banking system is a net lender to the RBI the system liquidity can be said to be in surplus
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