RBI will ensure adequate liquidity to support growth, says Shaktikanta Das
“The RBI will remain ready to undertake GSAP as and when warranted by liquidity conditions and will continue to undertake other other liquidity management operations like Twist and OMOs,” Das said.
The RBI kept key policy interest rates unchanged as expected to strengthen a fragile economic recovery and reiterated an accommodative stance.
“Let there be no concern about adequacy of liquidity… RBI will ensure adequate liquidity to support growth,” he said.
The 14-day variable rate reverse repo has been main instrument under main liquidity framework, he added, saying that potential liquidity overhang amount to more than Rs 13 lakh crore as the economy shows signs of emerging from the Covid-19 pandemic.
“Central banks across the world find themselves at crossroads. Countries tightening monetary policy are facing inflation much above the band, and registering growth rebounds above pre-pandemic conditions,” the RBI guv said.
Das announced the extension of the Rs 10,000 crore on-tap liquidity facility for small finance banks for another three months till December 31, 2021.
“RBI has given maintained ample surplus liquidity since the beginning of the pandemic for India’s speedy recovery, with surplus increasing further during September under reverse repo,” Das said.
Total liquidity injected during first six months of this year including GSAP was Rs 2.7 lakh crore, as against 3.1 lakh crore during full financial year 2021.
“This process has to be gradual, calibrated, and non-disruptive,” he said. “GSAP has been successful, coupled with other liquidity measures that made recovery conducive.”
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