The Reserve Bank of India (RBI) has released a draft circular on Basel III liquidity standards, aiming to enhance the liquidity resilience of banks. The draft guidelines, issued as part of the April monetary policy, invite comments from banks and stakeholders by August 31, 2024. The circular includes a requirement for banks to maintain an additional 5% run-off for retail deposits with internet and mobile banking. The proposed changes could impact 80% of retail deposits, with a lower impact on public sector banks. Analysts from IIFL Securities, including Rikin Shah, predict that the proforma Liquidity Coverage Ratio (LCR) could decline by 10-20%, potentially affecting net interest margins and earnings for banks. The announcement has already put pressure on bank stocks, with Federal Bank shares falling by more than 3% following the news.