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- RBI will fund the banking system with Rs 1.1 lakh crore.
- A variable rate repo auction and open market operations will be used to fund the banking system.
- Three tranches of Government securities valued at Rs 60,000 crore would be purchased through open market operations.
- January 30, February 13, and February 2025 are the dates of the tranches of open market purchase.
- On February 7, 2025, a 56-day Variable Rate Repo auction for Rs 50,000 crore will take place.
- On January 31, 2025, a $5 billion, six-month dollar-rupee swap auction will take place.
- Due to a reported deficit of more than Rs 3 lakh crore last week, the financial system is experiencing liquidity shortage.
- Banks have asked for a deferment because they are worried about how the increased liquidity coverage norms will affect credit flow.
- On April 1, banks will be required to keep additional cash in accordance with the new liquidity coverage norms.
- Banks’ proposal to include cash reserve ratios to the list of high-quality liquid assets under the new rules was denied by the RBI.
- To achieve the requirements for liquidity coverage, banks will have to spend more than Rs 4 lakh crore on government bonds.
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