Will conduct OMOs to manage liquidity when required: D Subbarao
Srinagar, May 9: Reserve Bank of India (RBI) has said it will inject liquidity through Open Market Operations (OMOs) to deal with any shortage of cash in the system."As and when necessary, we will do
Srinagar, May 9: Reserve Bank of India (RBI) has said it will inject liquidity through Open Market Operations (OMOs) to deal with any shortage of cash in the system.
"As and when necessary, we will do OMOs to manage liquidity," RBI Governor D Subbarao told reporters after the Central Board Meeting here.
He further said that RBI does not use foreign exchange to manage the liquidity situation.
"We don't use forex intervention as a measure of managing liquidity. Liquidity gets affected as a result of forex intervention," Subbarao said.
While RBI had kept the liquidity controlling rate-- Cash Reserve Ratio (CRR) -- unchanged in the last week's monetary policy, it had announced to purchase bonds worth Rs 10,000 crore to infuse liquidity in the system.
The industry had expressed disappointment when the central bank chose to kept the CRR unchanged.
Liquidity remained under pressure throughout 2012-13 because of persistently high government cash balances with the RBI and elevated incremental credit to deposit ratio for much of the year.
Last fiscal, the RBI injected liquidity to the tune of Rs 1.5 lakh crore through OMO purchase auctions.
"The Reserve Bank will endeavour to actively and appropriately manage liquidity to ensure adequate credit flow to the productive sectors of the economy and to reinforce monetary transmission consistent with the growth-inflation balance," the annual monetary policy statement released last week had said.
Finance Minister P Chidambaram had termed the RBI's announcement on OMO as "liberal".
OMOs are the market operations conducted by the RBI by way of sale/ purchase of Government securities to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.
"As and when necessary, we will do OMOs to manage liquidity," RBI Governor D Subbarao told reporters after the Central Board Meeting here.
He further said that RBI does not use foreign exchange to manage the liquidity situation.
"We don't use forex intervention as a measure of managing liquidity. Liquidity gets affected as a result of forex intervention," Subbarao said.
While RBI had kept the liquidity controlling rate-- Cash Reserve Ratio (CRR) -- unchanged in the last week's monetary policy, it had announced to purchase bonds worth Rs 10,000 crore to infuse liquidity in the system.
The industry had expressed disappointment when the central bank chose to kept the CRR unchanged.
Liquidity remained under pressure throughout 2012-13 because of persistently high government cash balances with the RBI and elevated incremental credit to deposit ratio for much of the year.
Last fiscal, the RBI injected liquidity to the tune of Rs 1.5 lakh crore through OMO purchase auctions.
"The Reserve Bank will endeavour to actively and appropriately manage liquidity to ensure adequate credit flow to the productive sectors of the economy and to reinforce monetary transmission consistent with the growth-inflation balance," the annual monetary policy statement released last week had said.
Finance Minister P Chidambaram had termed the RBI's announcement on OMO as "liberal".
OMOs are the market operations conducted by the RBI by way of sale/ purchase of Government securities to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.