RBI to resume normal liquidity management operations in phased manner

By: |
January 8, 2021 8:57 PM

The RBI on Friday said it has decided to restore normal liquidity management operations in a phased manner and will conduct variable rate reverse repo auction of Rs 2 lakh crore on January 15.

During the reporting month, the central bank purchased USD 14.289 billion and sold USD 4.028 billion, according to the monthly bulletin released by the RBI for January.During the reporting month, the central bank purchased USD 14.289 billion and sold USD 4.028 billion, according to the monthly bulletin released by the RBI for January.

The RBI on Friday said it has decided to restore normal liquidity management operations in a phased manner and will conduct variable rate reverse repo auction of Rs 2 lakh crore on January 15. In February last year, RBI had announced a revised Liquidity Management Framework (LMF) that was simplified and “clearly communicated” the objectives and toolkit for liquidity management.

However, in view of the COVID-19 outbreak, the rapidly evolving financial conditions and taking into account the impact of disruptions due to the lockdown, RBI had decided to temporarily suspend the revised LMF and the window for Fixed Rate Reverse Repo and Marginal Standing Facility (MSF) operations were made available throughout the day. This was intended to provide eligible market participants with greater flexibility in their liquidity management.

“On a review of evolving liquidity and financial conditions, it has been decided to restore normal liquidity management operations in a phased manner,” RBI said. Accordingly, it will conduct a Variable Rate Reverse Repo auction on January 15, 2021 under the revised LMF issued on February 6, 2020. The notified amount is Rs 2,00,000 crore, it said.

RBI further said the Fixed Rate Reverse Repo and MSF operations will continue to be available throughout the day. “As stated in the last MPC (Monetary Policy Committee) statement on December 4, 2020, it is reiterated that the Reserve Bank will ensure availability of ample liquidity in the system,” the central bank added.

In view of operational dislocations and elevated level of health risks posed by COVID-19, RBI had also decided to truncate trading hours for various market segments with effect from April 07, 2020.

Later, with the graded easing of lockdown restrictions, it was decided to restore trading hours for markets regulated by the Reserve Bank in a phased manner with effect from November 9, 2020.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Yes Bank says asset quality stress is at ‘peak’, GNPAs may rise after SC order
2Asset quality improves: Yes Bank reports Rs 151-crore profit on strong interest income
3RBI proposes 4-layered framework for regulation of shadow banks