The high frequency of flood occurrences and the uneven distribution of hydrological stations make it difficult to monitor large-scale floods. Emergence of the Gravity Recovery and Climate Experiment (GRACE) satellite system sets up a new era of large-scale flood monitoring without much reliance on in situ hydrological observations. The GRACE-derived flood potential index (FPI) exhibits its ability to monitor major events of 2003, 2004, 2007, and 2008 over the Indo-Gangetic-Brahmaputra Basin (IGBB). Precipitation and soil moisture are the major influencing factors of flood. However, the response of potential flooding to such parameters is little known. Pearson's lag correlation analysis is used to examine the response of the GRACE-based FPI to precipitation and soil moisture over the study region comparing seasonal time series of the variables. Results exhibited a 2-month lagged response of FPI to precipitation in the Upper Gangetic Yamuna Chambal Basin (UGYCB) and the Lower Gangetic Basin (LGB) and 1-month lagged response in the Lower Brahmaputra Basin (LBB). With context to soil moisture, a 1-month lag is observed in the Gangetic basins, and no lag is observed in the LBB. Event wise analysis of the lags portrays slightly varying lags for different events; however, it provides a picture on the interaction between these variables. This study also assesses the agreement between FPI and satellite-based river discharge, i.e. Dartmouth Flood Observatory (DFO) discharge. A good correlation (> 0.60) between the two is observed. Threshold values of FPI are determined for the LBB due to its annual flood frequency. The nearly similar accuracy of threshold FPI, determined using DFO discharge, in monitoring floods and the predictive skill measure of FPI for LBB to the previous studies demonstrates the utility of satellite-based discharge in the quantification of threshold FPI values for different percentile floods.