Bankers ask RBI for durable liquidity as deficit mounts to Rs 2 trillion

Economists are of the opinion that given the prevailing liquidity conditions, the RBI should prioritise liquidity management over rate cuts

Amid funds in the money market drying up, bankers in a meeting with the Reserve Bank of India (RBI) this week asked for liquidity to be made durable.

 

The instruments to be used in this connection include open market operations, variable rate repo (VRR) auctions, and buy/sell swaps, said sources aware of the development.  According to the data, the RBI on Thursday infused Rs 2 trillion through the liquidity adjustment facility.

 

The RBI’s intervention in the rupee spot market to stem the depreciation of the domestic currency has further strained systemic liquidity. Over the past two months, the central bank