India short-bond rally faces risks from cash drain, analysts Say

BofA Securities and Bandhan AMC expect the RBI to step up short-term cash withdrawal operations in coming months as surplus banking liquidity is seen climbing to pandemic-era levels of around 8 trillion rupees ($85 billion). DBS Bank expects the central bank to deploy a stronger tool in August by requiring banks to keep a larger proportion of deposits with the RBI, raising risks for the ongoing short-bond rally.