The RBI's announcement on July 31st 2012 following its Quarterly Monetary Policy Review (Q1 - FY 13) saw the SLR requirements for banks cut from 24% to 23% of NDTL (Net Demand and Time Liabilities). While the announcement has on one hand signalled liquidity relief/enhancement for the banking system and the economy thereby, the move has come in for a fair amount of criticism on financial news channels and websites alike. So, has the RBI missed a trick? In the week preceding the 9th of July 2012, the liquidity deficit (banks’ borrowing from the RBI) in the system (LAF) had come down significantly from a high of Rs 90,000 crores to around Rs 10,000 crores owing to a host of reasons. The significant ones being: Banks had drawn about Rs. 25,000 Crores by availing the export credit refinance option after the RBI enhanced the limit of the export credit refinance facility for banks from 15% to 50%, a move that was expected to provide an additional liquidity of about Rs. 30,000 crores (...