The Reserve Bank of India on Monday said it will conduct additional variable rate repo operations for longer tenors up to 31 days every Tuesday this month for Rs 25,000 crore each to provide additional liquidity support to banks.
The central bank is ready to provide liquidity aggregating Rs 1 lakh crore to the banking system in the current month.
In mid-February, the RBI had said in order to address additional demand for liquidity and with a view to provide flexibility to the banking system in its liquidity management towards March-end, it is prepared to inject adequate additional liquidity using a combination of appropriate instruments, while continuing with its normal Liquidity Adjustment Facility (LAF) operations.
At a post-monetary policy review press conference on February 7, RBI Deputy Governor Viral Acharya said “At present, the system remains by and large still in surplus liquidity mode…The system liquidity is, however, steadily moving towards the neutrality objective. “For instance, in December and January the system liquidity was in deficit mode on a few days and RBI provided liquidity through its repo operations to manage the system’s frictional liquidity needs on these days.”