MUMBAI, Aug 10 Reuters The Reserve Bank of India RBI will withdraw nearly one trillion rupees 12.07 billion from the banking system through a temporary increase in the amount of funds lenders set aside with the central bank, as it tries to keep a lid on inflation.

Earlier in the day, India39;s Monetary Policy Committee kept key policy rates unchanged but RBI Governor Shaktikanta Das asked banks to hold an incremental cash reserve ratio CRR of 10 on increase in deposits between May 19 and July 28, with effect from the fortnight starting Aug. 12.

Liquidity surplus in India39;s banking system has averaged around 2.5 trillion rupees in August, up from 1.6 trillion rupees in July, pushing down overnight borrowing and lending rates.

Thursday39;s measure also intends to absorb liquidity added to the banking system due to a return of 2000rupee denomination notes, Das said.

Even after this temporary impounding, there will be adequate liquidity in the system to meet credit needs of the economy, Das said.

The RBI will review this measure before Sept. 8, ahead of the Indian festive season, when currency in circulation typically increases and banking liquidity declines, he said.

That implied banks would have to maintain additional CRR for the next two fortnights, ending Aug. 25 and Sept. 8.

Traders expect interbank call money rates, as well as the TREPS rate, at which nonbank borrowers raise overnight funds, to start rising from Monday, with nearly half of the surplus moving…