Shaktikanta Das says RBI has turned to rebalancing liquidity on dynamic basis
RBI Governor Shaktikanta Das says the central bank has turned to rebalancing liquidity on a dynamic basis. Adequate liquidity has been ensured to support the central bank’s ‘accommodative’ stance of policy, he says.
The RBI has taken “quick and decisive” steps to ease liquidity contraints, restore market confidence and prevent contagion to other segments of the financial market, he says.
The RBI announces four steps:
–Variable rate repo (VRR) operations of varying tenors to be conducted when warranted
–VRRs, VRRRs of 14-day tenor to operate as main liquidity management tool
–These main operations to be supported by fine-tuning operations to tide over any unanticipated liquidity changes
–From March 1, fixed rate reverse repo, Marginal Standing Facility (MSF) operations to be available only between 5:30 pm and 11.59 pm on all days (instead of 9:00 am to 11:59 pm)
The RBI’s move was in tandem with its intent to a start to restore normal liquidity operations in a phased manner, after assuring bond markets of ample liquidity. (Read more on RBI’s liquidity announcements)