Liquidity boost = arbitrage opportunity for banks. Curious how this will impact lending rates and market stability

India's banking sector is experiencing a significant increase in liquidity, presenting an arbitrage opportunity for lenders. Bloomberg posted on X that this situation allows banks to borrow funds at lower costs and deposit them with the central bank at a higher interest rate. This development is a result of the current financial conditions in the country, which have led to an influx of liquidity in the banking system. As banks take advantage of this opportunity, it could have implications for the broader financial market and monetary policy in India. The central bank's role in managing this liquidity surge will be crucial in maintaining economic stability.