Why govt may shift cash holdings from RBI to commercial bank

The government’s hefty cash holdings, now parked at the RBI, may soon be deposited at commercial banks, a move that would add liquidity to the banking system and make monetary policy more effective by making it easier for banks to cut lending rates. Government had Rs 1,00,000 crore held at the Reserve Bank of India at the end of last month, outside of circulation, and roughly twice the amount normally held there as it cut back spending in order to contain its fiscal deficit..............

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