RBI to fine-tune unanticipated liquidity flows: Das
Bank credit growth slows to 6% in June
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Reserve Bank of India (RBI) will conduct fine-tuning operations to manage unanticipated and one-off liquidity flows to ensure balanced liquidity conditions in the system, Governor Shaktikanta Das said on Tuesday. The Governor said that in the monetary policy statement of August 6, he had set out a road map for the gradual restoration of the Variable Rate Reverse Repo (VRRR) auction as the main operation under the revised liquidity management framework announced on February 6, 2020. In order to facilitate this process as markets settle down to regular timings and functioning and liquidity operations normalise, Das said, "the RBI will also conduct fine-tuning operations from time to time as needed to manage unanticipated and one-off liquidity flows so that liquid conditions in the system evolve in a balanced and evenly distributed manner."
Bank credit grew at a slower pace of six per cent in June compared to 6.4 per cent in the year-ago period mainly due poor offtake in metros, RBI data showed on Tuesday.
He was speaking at a conference organised by Fixed Income Money Market and Derivatives Association of India (FIMMDA) and Primary Dealers' Association of India (PDAI). Das said it is also an opportune time to consider new instruments to facilitate hedging of long-term interest rate and re-investment risk by market participants such as insurance companies, provident and pension funds and corporates.
