India’s banking system is grappling with its steepest liquidity deficit in nearly six months, and it’s not just a seasonal hiccup. According to IDFC First Bank, the RBI has been offloading dollars in the market since October, a strategy that inadvertently sucked liquidity out of the banking system. It hit a record low of ₹84.9337 per dollar on Tuesday, forcing the RBI to step in and potentially drain even more liquidity as it tries to prevent further currency slippage amidst a ballooning trade deficit and a surging greenback. Even after recent measures like a cash reserve ratio (CRR) cut and variable rate repo auctions, the outlook remains bleak. Add to that the usual end-of-year cash withdrawals for festive spending, and you’ve got a perfect storm of liquidity pressure. For now, banks are waiting for RBI to step in with fresh liquidity-boosting measures to decide whether the pressure eases or the squeeze gets tighter.