The two biggest concerns of Reserve Bank of India since the beginning of this fiscal have been towering inflation figures and tight liquidity.

In line to these issues, RBI has raised policy rates six times in this financial year. The recent mid quarter review of monetary policy however did not bring any further rise in policy rates. However the pressure on margins may still be felt by many small and mid sized banks.

According to Abheek Barua, chief economist of HDFC Ltd, the final cut in statutory liquidity ratio (SLR) has led to inception of long term liquidity in the system.

Although there has been no rise in policy rates this time, but the scenario still stands way far from normalized rates.