Finance How the Indian banking system works and money is created – An explainer Updated : July 27, 2020 10:36 PM IST In case of a CRR shortfall, banks can convert excess SLR/ HQLA into CRR at the RBI’s LAF repo window. The banking system does not need liquidity surpluses to disburse fresh loans, because fresh loans create their own fresh deposits. Subscribe to Moneycontrol PRO at just Rs.33/- per month for the first year. Use code SUPERPRO. Limited period offer. Available on Web and Android.