The reset in the liquidity coverage ratio, or LCR, gives government-owned banks more room to support lending from their existing resources. The reported benefit comes from a relaxation in liquidity requirements, with excess investment buffers offering a possible source of support for further growth in loans.

This matters because the pace of deposit mobilisation remains relatively weak. Public sector banks have substantial loan books, and the additional room could help them sustain credit expansion despite that constraint. The report points to investment buffers as a means of supporting incremental lending, rather than suggesting that deposit mobilisation has strengthened.

The ₹2.1 lakh crore figure represents lending headroom, not an amount already disbursed to borrowers. The supplied report does not give a bank-wise breakdown or say how much of this capacity banks plan to use. It also does not specify the revised liquidity requirement, its implementation date or which loan segments might receive additional funding.