Mumbai, Sept. 5 -- The unexpectedly large inflows under the Reserve Bank of India's dollar mobilization scheme have created a new liquidity headache for the central bank, one that could linger for a while. The scheme announced early June was aimed at drawing foreign currency inflows and bolstering the rupee amid pressure on the currency.

Three months on, while the pressure is not off the rupee, the banking system is awash with liquidity, with the surplus likely to remain elevated through the fiscal year and perhaps longer, potentially forcing the RBI to weigh fresh measures to absorb the excess without disrupting the bond markets or hurting bank profitability, three treasury officials and four economists said.

RBI's dollar mobilization ...