RBI has enough tools to absorb liquidity surge, 'nothing off table': Governor Malhotra
The Reserve Bank of India possesses tools to manage banking liquidity from deposit inflows. Governor Sanjay Malhotra indicated a readiness to deploy various measures if needed. He noted that excess liquidity currently lowers the weighted average call rate. The central bank anticipates some liquidity withdrawal naturally over time. The MPC will reassess growth-inflation dynamics next month amid…
RBI Governor Sanjay Malhotra disclosed on Friday the central bank's intention to utilize various tools to manage liquidity and maintain the overnight rate in line with the repo rate. Malhotra stated that surplus liquidity in the banking system may be gradually reduced through foreign exchange interventions and banks' reserve requirements.
He emphasized that the RBI possessed multiple options beyond the statutory liquidity ratio review, including open market operations and foreign exchange swaps. Following the mention of debt sales as a potential measure to address rupee liquidity, Indian bonds experienced a decline, with yields reaching their highest levels in over three months.
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- RBI has bond sales, FX swaps to manage liquidity: RBI Governor thehindubusinessline.com
