MUMBAI, Sept 26: The Reserve Bank of India (RBI) said that it could conduct open market operations (OMOs) to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy.
Currently, the RBI is injecting about Rs 1.5 trillion into the system on a daily basis through the liquidity adjustment facility (LAF), the export credit refinance facility (ECR) and the marginal standing facility (MSF) taken together, the RBI said in a statement.
Nevertheless, liquidity conditions have been tightening as reflected in the hardening of yields in the government securities market due to uncertainties around the Government borrowing programme for the second half of 2013-14 as well as the prospective effects of banks’ half-yearly account closure, the seasonal pick-up in credit demand, festival-related demand for currency and sluggish deposit growth.
The Reserve Bank is closely and continuously monitoring liquidity conditions and will take actions as appropriate, including open market operations, to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy, it added. (UNI)
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