As a step to tide over expected tightening of liquidity in March, the Reserve Bank of India (RBI) would permit standalone primary dealers to participate in four regular term-repo auctions from the fortnight beginning March 19. RBI also said it would conduct additional liquidity operations based on evolving liquidity conditions in the month where the liquidity turns tight due to advance tax payments by corporates.
RBI also said that it will inject adequate additional liquidity using a combination of appropriate instruments, while continuing with its normal Liquidity Adjustment Facility (LAF) operations. Based on a continuous assessment of the evolving liquidity conditions, the tenor and magnitude of additional liquidity operations will be announced a few days in advance of each tranche.
