Core Viewpoint - The Reserve Bank of India (RBI) has announced liquidity measures amounting to ₹1.45 lakh crore, but this may not be sufficient due to concurrent advance tax payments estimated at ₹2-2.5 lakh crore, which could drain funds from the banking system [1][9]. Liquidity Measures - Economists and treasury officials suggest that the RBI may need to provide an additional ₹1.5-2 lakh crore of durable liquidity to ensure effective transmission of recent rate cuts, assuming no further foreign exchange intervention [9]. - The average system liquidity was reported at ₹1.68 lakh crore in November and ₹2.63 lakh crore in December so far, with liquidity being about 0.8% of Net Demand and Time Liabilities (NDTL) in November [9]. Deposit and Lending Rates - Fresh deposit rates have decreased by 92 basis points to 5.57% since February, while outstanding deposit rates have only fallen by 24 basis points to 6.78% [6]. - On the lending side, fresh loan rates have dropped by 76 basis points to 8.64%, whereas outstanding lending rates have increased by 56 basis points to 9.24% [6]. Market Reactions - Treasury heads from various banks are monitoring market reactions before making decisions on lowering deposit rates, indicating that the impact of liquidity on deposit rates will depend on market conditions in the last quarter of the year [5][9].