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Liquidity glut, ultra low rates may prompt RBI to change course soon

Some banks are even giving 10-15-year term loans at below bond market rates. There is no avenue to deploy the excess liquidity otherwise

Governor Shaktikanta Das has pledged to stay accommodative well into 2021 as he tries to dig the economy out of an unprecedented technical recession

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The central bank is unlikely to change its policy stance from accommodative to neutral, any rate hike to control inflation is also out of the question for now

Anup Roy Mumbai

4 min read Last Updated : Nov 26 2020 | 10:53 PM IST

The foreign exchange intervention and plethora of liquidity measures undertaken by the Reserve Bank of India (RBI) staved off a crisis in the banking system, and helped the government borrow a record amount via bonds at more=than-a-decade-low rates, but could it be time now to withdraw some of the accommodation? Experts say yes.

The bond market has been taking it easy for quite some time now. Despite Rs 12 trillion borrowing programme, top corporates were able to borrow short-term money at below the repo rate. State Bank of India (SBI) group chief economic advisor Soumya Kanti Ghosh also wrote in

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