The Reserve Bank of India (RBI) has raised the ceiling on liquidity it can suck out from the banking system for the second time in three days, suggesting it is no longer accommodative. | |
| The apex bank has revised the ceiling for the total amount of government bond issuances under its market stabilisation scheme (MSS) to Rs 1,10,000 crore from Rs 95,000 crore set on April 24 when the 2007-08 annual policy was announced. |
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| The original MSS ceiling was set at Rs 80,000 in the 2007-08 budget. The outstanding under MSS currently is Rs 78,000 crore. |
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| Further liquidity tightening happens as money supply rose in the first thirteen days of this month, driven by a sharp rise in term deposits with banks. |
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| Banks' time deposits increased by Rs 42,791 crore to Rs 23,79,836 crore during the thirteen days. Also, inflation for the week ended April 14 was at 6.09 per cent, same as the previous week and much above the RBI's target of close to 5 per cent. |
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| Partha Mukherjee, head-treasury, UTI Bank, said, "The RBI wants to keep liquidity on a tight leash. In the monetary policy also, it had set a medium-term target of 4-4.5 per cent. Inflation figure indicates that nothing much has changed. So, the RBI is continuing to take action. As a result, near-term rates will be in close range and call rate is likely to be at 10-12 per cent." |
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| In a statement, the RBI said the threshold at which the ceiling will be reviewed in future will now be Rs 95,000 crore. |
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