AI, ML could shape Liquidity Management

RBI can do a world of good to create a more robust environment for NBFCs on liquidity side

The world over there have been increasing concerns about cash flow liquidity risk and market liquidity risk in the volatile global scenario marred by war, natural calamities, supply chain disruptions, geopolitical rivalry, etc. It is a common knowledge that stable environment offers a stable and predictable liquidity scenario, stable interest rate scenario and offer lower risks both on liquidity and interest rates. However, this is a mirage one should stop chasing. With each passing day, financial world of the whole universe is getting more and more interlinked and interdependent.

Considering the world, all are living in, it should be safely presumed that only certainty is uncertainty. The world is moving from a bipolar world to multipolar world and over and above that on one thing on whom no one has any control is ‘Mother Nature’. Kishore Lodha, Chief Financial Officer, U GRO Capital, hints: “So, we should remain prepared for more and more global conflicts, small- and large-scale wars and over and above that small-scale and large-scale natural calamities. It will always keep the cashflow, liquidity and interest rates in an uncertain zone.”

Thankfully central banks across the globe are taking steps to minimize the risks of any of such eventuality. Central banks, and more specially RBI, are far more prepared now to deal with any geopolitical event or a natural calamity. A case in point is covid. The way world across, entire cash flow system, liquidity and interest rates were managed by most of the impactful countries, speaks volumes about preparedness of the world to deal with such eventualities. Kishore alerts: “Collateral damages are bound to happen, and it will keep the whole economic environment vulnerable, uncertain, complex, and ambiguous.”