Liquidity deficit within comfort zone: RBI's Gokarn

KOLKATA Fri Dec 7, 2012 11:42am IST

Currency of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/Files

Currency of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

KOLKATA (Reuters) - The Indian banking system liquidity deficit is within comfort zone and the RBI will take more steps to address the deficit if needed, its Deputy Governor Subir Gokarn said on Friday.

"An OMO (open market operation) gives us the flexibility to respond in very short order to stresses," Gokarn told reporters on the sidelines of an industry event.

"So, if we see them remaining in the system, then obviously we have the capacity to respond to them," he said referring to the liquidity stress.

Last week, the RBI resumed bond purchases through the open market after a span of five months to offset the impact of expected cash outflows as corporates start paying taxes ahead of the December 15 deadline.

The banking system's liquidity shortage has stayed above the central bank's stated comfort zone since the middle of last month due to festive season withdrawal of funds from banks and the slow pace of government spending.

Banks borrowed over a trillion rupees for 11 consecutive sessions last month, compared with RBI's comfort zone of about 700 billion rupees.

(Reporting by Shamik Paul; Editing by Prateek Chatterjee)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Fuelling Change

REUTERS SHOWCASE

NSEL Fraud

NSEL Fraud

Govt orders Financial Tech to absorb NSEL, liabilities  Full Article 

Quarterly Result

Quarterly Result

HDFC Bank net profit up 20 percent, lags estimates.  Full Article 

JLR China

JLR China

JLR sees 20 percent growth in China sales this year - exec  Full Article 

China Economy

China Economy

China's growth slowest since global crisis, annual target at risk  Full Article 

Coal Reforms

Coal Reforms

Factbox - India pushes ahead with coal reforms  Full Article 

Apple Result

Apple Result

Apple's iPhone sales beat Street but iPad volumes slide  Full Article 

Airport Accident

Airport Accident

Total CEO de Margerie killed in Moscow business jet accident  Full Article 

Nadella's Paycheck

Nadella's Paycheck

New Microsoft CEO Nadella's pay tops $80 mln with big stock awards.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage