Indian central bank's new liquidity norm to free up $35 billion, likely boosting credit growth

MUMBAI (Reuters) -The Reserve Bank of India's relatively relaxed final guidelines on banks' liquidity coverage ratio (LCR) is expected to free up capital worth up to 3 trillion rupees ($35.24 billion) that could boost credit growth by as much as 2 percentage points, analysts said. On Monday, the RBI lowered the proportion of high-quality liquid assets (HQLA) - cash, central bank reserves and federal government bonds - that banks are required to hold against digitally linked deposits, saying the net impact will improve banks' LCR by around 6 percentage points as of December-end. This is equivalent to 1.4-1.5 percentage points of additional credit growth potential, he said.