RBI wants liquidity to remain in deficit: Gokarn

Reserve Bank Deputy Governor Subir Gokarn today said the central bank was focused on managing liquidity in the system at a 1 percentage point deficit level so that the monetary actions had the desired impact.

"Clearly, we want to see it [liquidity] remain in deficit...That is our objective in terms of liquidity management. At the same time, we do not want it to become disruptively deficit. We would be looking to manage it in the '-1 per cent mark' on a sustained basis," RBI Deputy Governor Subir Gokarn told reporters here after the credit policy announcement.

The Reserve Bank had in its annual policy on May 3 announced that the repo rate at which it lends to the banks will be the operational rate henceforth, which rests on the premise that the liquidity is in the deficit mode.

It had then said such a scenario would give it the comfort of a better transmission of its policy calibrations by having the desired effect.