RBI may cut key debt ratio for lenders in next fiscal year

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Reserve Bank of India is considering cutting the held-to-maturity (HTM) ratio for lenders starting in April. (Reuters) Reserve Bank of India is considering cutting the held-to-maturity (HTM) ratio for lenders starting in April. (Reuters)
SummaryReserve Bank of India is considering cutting the held-to-maturity (HTM) ratio for lenders starting in April.

the central bank sets the amount of cash deposits that lenders must hold.

However, the action disappointed investors, who had hoped the RBI would also inject liquidity via bond purchases conducted through open market operations (OMOs), which would most directly benefit debt markets.

Khan said the RBI could still resort to OMOs in February and March, the last two months of the current fiscal year, and was watching government spending.

"As things pan out we will see and if it is becoming a pattern we will do OMOs in addition to CRR," Khan said referring to reduced government spending.

"There could be OMOs in the next 2 months," he added.

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