RBI to take steps if cash shortage persists - deputy governor

MUMBAI Tue Nov 27, 2012 11:44am IST

People walk in front of the Reserve Bank of India (RBI) building in Kolkata May 21, 2012. REUTERS/Rupak De Chowdhuri/Files

People walk in front of the Reserve Bank of India (RBI) building in Kolkata May 21, 2012.

Credit: Reuters/Rupak De Chowdhuri/Files

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MUMBAI (Reuters) - The Reserve Bank of India will take measures to address liquidity deficit if the shortage persists, said H.R. Khan, the central bank's deputy governor.

Khan was speaking on the sidelines of the Asian Financial Cooperation Conference on Tuesday. He added the central bank can go for open market purchases of bonds if needed.

Liquidity has tightened in the banking system and is beyond the RBI's stated comfort zone, mainly due to the slow pace of government spending.

Banks have been borrowing more than one trillion rupees daily through the RBI's repo window since the last nine sessions. (Reporting by Suvashree Dey Choudhury; Editing by Prateek Chatterjee)

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