RBI Faces Surplus Liquidity Amidst Slow Credit Growth

Imagine the banking system has a lot of extra money (surplus liquidity).

The government tried to fix it, but even though interest rates are lower, companies aren't borrowing much.

This means banks have too much money sitting around.

They used to have a money shortage, but now they have too much.

The worry is that all this extra money might make prices go up (inflation) or cause problems in the financial system.

The government now needs to rethink how it handles all this extra money.