
India's banking system could see a significant improvement in liquidity following the RBI's recent measures. Aditya Pagaria, Senior Fixed Income Fund Manager, Axis Mutual Fund, says surplus liquidity has already strengthened after the RBI's record dividend transfer to the government. He expects FCNR(B) and ECB inflows of $70–80 billion over the next few months to further boost liquidity, potentially taking the system surplus close to ₹10 lakh crore. He also explains why the RBI may step in to absorb excess liquidity while ensuring overall market conditions remain comfortable.