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RBI will keep injecting liquidity via OMOs till March-end: Viral Acharya

Acharya said RBI has also provided infusion of liberal liquidity through term repo in addition to the usual provision via the liquidity adjustment facility

Press Trust of India  |  Mumbai 

RBI Deputy Governor Viral Acharya
RBI Deputy Governor Viral Acharya | File photo

The (RBI) will continue to inject into the banking system through (OMO) purchases till the end of this fiscal, its deputy governor said.

In the current financial year, the central bank has conducted to the tune of Rs 1.36 trillion, with over Rs 1 trillion of the infusion in the last three months, he said.

Late last month, the had announced that it would conduct purchases of under OMO for an amount of Rs 400 billion in December to meet needs.

"We expect that this increased frequency and quantum of may be required until end of March, but the exact calibration will depend on sustained changes in the behaviour of currency in circulation and the magnitude of sterilisation for RBI's forex operation, which keeps evolving with external sector conditions," Acharya told reporters in a post policy conference on Wednesday.

In the fifth bi-monthly on announced Wednesday, left repo rates unchanged at 6.5 per cent.

Acharya said has also provided infusion of liberal through term repo in addition to the usual provision via the liquidity adjustment facility (LAF).

"We also plan to conduct additional long-term repo operations to meet transient liquidity demand that is likely to emerge later this month on account of the third tranche of advance tax outflows," he said.

Talking about the liquidity crisis faced by the non-banking finance companies (NBFCs) and housing finance companies (HFCs), Acharya said RBI has been watching the market developments closely since the end of August.

"We have been in regular touch with the Securities and Exchange Board of India (Sebi) to assess the fallout in terms of mutual fund redemptions and the resulting roll-over risks for NBFCs and HFCs," he said.

First Published: Thu, December 06 2018. 14:37 IST
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