RBI may look at OMOs to infuse durable liquidity, say market experts

Government cash balance turns negative; Fx market remains volatile

As the liquidity deficit in banking widens, the Reserve Bank of India (RBI) may have to resort to open market operations (OMOs), directly or through secondary markets, to maintain liquidity within a manageable range, according to market experts.

 

The deficit is estimated to be between Rs 50,000 crore and Rs 1 trillion.

 

Temporary measures like variable rate repos (VRR) may provide short-term relief but are unlikely to address fundamental liquidity gaps, they said.

 

The latest RBI data shows the liquidity deficit was Rs 36,418 crore on Tuesday. It fell into deficit on Tuesday after two months due to outflows on