Excess liquidity not causing systemic risk: Finance secy

The current liquidity glut in the banking system is not a matter of concern as of now, Finance Secretary Ashok Chawla said today.

“No, not at all, as it is not causing any systemic risk,” Chawla said responding to a question whether excess liquidity was posing inflation worry. He said the government wants to ensure that adequate funds are available for corporates, who are currently opting for external commercial borrowings, and qualified institutional placements.

“We want to ensure that when these (corporates) come back, there are enough funds available in this window,” he said. Chawla said the current inflation was being driven by food prices, and the government may take some more short-term administrative measures, like imposing stock limits and offloading more stocks of food grains in the market to curb price rise.

The inflation based on the Consumer Price Index has been ruling in double digits, sharply in contrast with the widely tracked Wholesale Price Index that has averaged 0.51 per cent in September.