New Delhi: The Reserve Bank of India on Friday unveiled a set of measures aimed at easing liquidity pressures in the banking system, with interventions expected to inject more than Rs 2 lakh crore into the financial market.
The central bank said the decision followed a review of prevailing liquidity and broader financial conditions. To improve cash availability, the RBI will deploy a mix of open market operations, a foreign exchange swap and a variable rate repo facility.
As part of the initiative, the RBI will conduct a 90-day variable rate repo auction of Rs 25,000 crore on January 30, enabling banks to raise short-term funds at market-determined interest rates against eligible collateral.
In addition, the RBI will undertake a dollar-rupee buy/sell swap auction worth $10 billion on February 4 for a tenure of three years.
Under this arrangement, banks will sell dollars to the central bank in exchange for rupees and agree to repurchase the foreign currency at a later date, a move aimed at boosting rupee liquidity without permanently impacting foreign exchange reserves.
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The RBI also announced plans to purchase government securities worth Rs 1 lakh crore through open market operations.
The bond purchases will be carried out in two phases of Rs 50,000 crore each on February 5 and February 12.
The central bank said detailed operational guidelines for each measure will be issued separately and reaffirmed that it will continue to closely track liquidity and market conditions, taking further steps if required to ensure orderly functioning of the financial system.
