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RBI to conduct two-way fine-tuning liquidity operations depending on evolving conditions, Governor Das says

Due to the efforts of the central bank, surplus liquidity in the banking system has come down from Rs 6.7 lakh crore in April-May to Rs 3.8 lakh crore in June-July, Shaktikanta Das said

August 05, 2022 / 04:25 PM IST
Representative image

Representative image

The Reserve Bank of India (RBI) will conduct two-way fine-tuning liquidity operations depending on evolving financial conditions, the governor of the central bank said on August 5.

“Going forward, the RBI will remain vigilant on the liquidity front and conduct two-way fine-tuning operations as and when warranted,” the RBI Governor Shaktikanta Das said during the bi-monthly Monetary Policy announcement.

Also Read: RBI Monetary Policy Live Updates

These will be mainly variable rate repo and reverse repo operations depending on the evolving liquidity position, he added.

The central bank infuses liquidity in the system through repo operations and sucks it out by conducting reverse repo operations.

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Also Read: RBI retains FY23 GDP growth forecast at 7.2%

Das said that due to the steps undertaken by central bank, surplus liquidity in the banking system has come down from Rs 6.7 lakh crore in April-May to Rs 3.8 lakh crore in June-July. This was largely due to the variable rate reverse repo operations and Standing Deposit Facility, he said.

The RBI, which is looking to scale back pandemic-era surplus, has ensured that liquidity will continue to be in surplus at least this year. Although RBI will continue to suck out liquidity surplus, the process is unlikely to be hurried, said bankers.
Moneycontrol News
first published: Aug 5, 2022 10:43 am
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