Informist, Friday, Sep 30, 2022
MUMBAI – Downplaying concern about tight liquidity in the banking system, Reserve Bank of India Governor Shaktikanta Das pointed out that liquidity continues to be in surplus and the central bank will continue to fine-tune operations for injection and as well as absorption of liquidity.
“Liquidity is not tight, the net LAF (liquidity adjustment facility) continues to be in surplus for last more than two years, except two-three days because of standing liquidity facility for primary dealers.” he said today at the press meet after the Monetary Policy Committee meeting.
Das said overall liquidity in the financial system remains surplus, even though there has been temporary movement of liquidity from the banking system to “different basket” because of high goods and service tax, and direct tax collections tightened liquidity for shorter time.
Liquidity in the banking system is currently estimated to be in a deficit of over 187.28 bln rupees as on today, as against 89.19 bln rupees on Thursday.
On Sep 21, liquidity in the banking system slipped into deficit for the first time since May 2019.
The weighted average call rate–the operating target of monetary policy–was 5.98% today, compared with 5.55% on Thursday.
Current, temporary moderation of surplus liquidity needs to be seen in the context of the large potential liquidity in the system arising from the expected pick-up in government spending that usually happens in the second half of the financial year, Das said in his statement.
“If you take all into account system liquidity in order of 5 trln rupees, so I think there should not be any concern on suddenly liquidity being tight,” the governor said.
Meanwhile, the central bank remains open to short-term liquidity operations to manage liquidity, including overnight variable rate repo operations, Das said.
“Fine-tuning operations of various maturities for absorption, as well as injection of liquidity will continue as may be necessary from time to time,” the governor said. End
Reported by Vishal Sangani and Richard Fargose
Edited by Akul Nishant Akhoury
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