RBI's liquidity committee favours long-term lending operations

Existing liquidity framework good enough, says internal committee

An internal working group of the Reserve Bank of India (RBI) to review the current liquidity management framework has said that the existing framework can continue with some minor changes. The panel, however, said the central bank can minimise its secondary market bond purchases, and instead use longer term lending operations as a new tool to infuse liquidity in the system. This, the panel said, would help offset build-up of a large deficit or surplus.
 
This is slightly contrary to what RBI Governor Shaktikanta Das had said on the June 6 monetary policy committee (MPC) that the existing framework,