LCR reset creates ₹2.1 Lakh-crore lending headroom for PSU Banks

Public sector banks gained significant lending headroom after liquidity requirement relaxation. This allows them to sustain credit growth while deposit mobilisation remains relatively weak. Excess investment buffers could support incremental loan growth on their substantial loan books. Banks can now free up funds tied up in government bonds for lending. This improvement is visible at some of the largest state-owned lenders.

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