RBI extends special liquidity measures till 8 April

RBI extends special liquidity measures till 8 April

Mumbai: The Reserve Bank of India (RBI) on Tuesday extended its special measures for easing the monetary supply till 8 April, in view of the current liquidity situation.

The special measures, which were announced when liquidity came under pressure due to the festive season and Coal India IPO, were due to expire on 28 January.

Under the facility, banks are allowed to sell some of the government securities to the central bank to raise funds. Statutory liquidity ratio (SLR), the amount which banks have to park in government securities, was earlier reduced from 25% to 24%.

The facility, which was slated to end on 28 January, has been extended up till 8 April.

The RBI’s special measures enable banks to avail 1% 1% more funds through the liquidity adjustment facility (LAF), based on their deposits.

“For any shortfall in maintenance of the Statutory Liquidity Ratio arising out of availment of this facility, banks may seek waiver of penal interest as an ad hoc measure," it said.

Scheduled commercial banks may avail of additional liquidity support under LAF to the extent of up to 1% of their deposits till 8 April, RBI said in its third quarter policy review.

“The Reserve bank will constantly monitor the credit growth and, if necessary, will engage with banks which show an abnormal incremental credit-deposit ratio," it said.