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Why the RBI is running special audits to verify liquidity of India’s banks
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Synopsis
The RBI recently undertook special audits that sought to confirm if Indian banks were fulfilling their liquidity criteria. An explainer.
The Reserve Bank of India (RBI) recently conducted special audits with banks to verify their holdings of eligible securities for maintaining the liquidity coverage ratio (LCR). This is a special audit meant to prevent the sudden collapse of banks – like what happened in the US with Silicon Valley Bank and Signature Bank. These audits verify whether securities classified as LCR by banks are truly liquid. What is LCR, and why does it matter for
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