RBI announces measures to boost liquidity in banking system
Mumbai: The Reserve Bank of India (RBI), announced a series of initiatives on Monday to ease liquidity pressures in the banking system, including government bond purchases and a dollar/rupee swap auction, Reuters reported.
As part of its measures, the RBI will purchase government securities worth Rs 60,000 crore ($6.96 billion) in three installments and conduct a 56-day variable rate repo auction amounting to Rs 50,000 crore on February 7, according to an official release.
Additionally, the RBI will hold a USD/INR buy/sell swap auction of $5 billion with a six-month tenor on January 31.
The announcement follows a sharp widening of the banking system’s liquidity deficit, which reached a one-year high in the fortnight ending January 24.
According to RBI data, the daily average liquidity deficit during this period surged to Rs 2.39 trillion.
The Central bank assured that it "will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions."
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