The Reserve bank of India (RBI) will review the liquidity ratio framework for banks and issue a draft circular shortly for public comments.

The purpose is to work towards better management of liquidity risk by banks.

"The recent episodes in some jurisdictions have demonstrated the increased ability of the depositors to quickly withdraw or transfer deposits during times of stress, using digital banking channels. Such emerging risks may require a revisit of certain assumptions under LCR (liquidity coverage ratio) framework," RBI Governor Shaktikanta Das said.

Banks covered under the LCR framework are required to maintain a stock of high-quality liquid assets (HQLA) to meet the expected net cash outflows in the next 30 days. Securities eligible for statutory liquidity ratios are reckoned as HQLA to calculate LCR. Banks have to maintain 100% LCR.

“The review of the LCR framework with 24/7 payment systems could act as a positive enabler to address frictional liquidity mismatches,” said State Bank of India chairman Dinesh Khara.