Wednesday, November 28th 2018

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3 3 of 8 11/28/2018, 1:42 PM 2018 The Indian Express Ltd. All Rights Reserved Aviation Banking & Finance Budget Others Companies Economy Companies Market RBI set to inject Rs 40,000 crore into the system in Decemberhttps://indianexpress.com/article/business/banking-andfinance/rbi-set-to-inject-rs crore-into-the-system-in-december / Business Advertising RBI set to inject Rs 40,000 crore into the system in December When the IL&FS issue rocked the financial sector in August this year, the non-banking financial sector was also hit with the system facing a liquidity shortage of over Rs 1 lakh crore. By ENS Economic Bureau Mumbai Published: November 28, :09:24 am Related News

4 BI set to inject Rs 40,000 crore into the system in December Business... 4 of 8 11/28/2018, 1:42 PM RBI eases external commercial borrowing hedging provisions Govt does not need extra funds from RBI to meet fiscal deficit target: Arun Jaitley RBI reserves: Revaluation gain not to be considered In talks with RBI to fix economic capital framework: Govt The RBI Board, in its meeting on November 19, did not consider any proposal to boost liquidity for the non-banking financial sector (NBFC) despite a strong pitch by the government nominees. (Express Photo by Pradip Das) The Reserve Bank of India has decided to inject a higher amount of Rs 40,000 crore through purchase of government securities under open market operations (OMOs) in December Advertising According to the RBI, this is based on an assessment of the durable liquidity needs going forward. The auction dates and the government securities to be purchased in the respective auctions would be communicated in due course. The OMO amount stated above is indicative and the RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions, it said. While the liquidity position has showed marginal improvement in the last couple of days, the banking system liquidity deficit continued to be pressured for the last two months despite the OMO purchases to the tune of Rs 36,000 crore undertaken by the RBI in October and Rs 34,000 crore in November. The liquidity deficit in the banking system can be attributed to the higher fund requirements for meeting the festive season demand, liquidity concerns witnessed in the NBFC

5 5 of 8 11/28/2018, 1:42 PM sector and increased forex sales (and consequent liquidity removal) to stem the rupee depreciations. The RBI Board, in its meeting on November 19, did not consider any proposal to boost liquidity for the non-banking financial sector (NBFC) despite a strong pitch by the government nominees. The RBI, which was insisting that there was enough liquidity in the system, may have baulked at such a move on fears that such a facility was likely to be misused. However, the board is expected to take a view on the liquidity support in the next board meeting on December 14. Advertising When the IL&FS issue rocked the financial sector in August this year, the non-banking financial sector was also hit with the system facing a liquidity shortage of over Rs 1 lakh crore. The government asked the RBI to open a special liquidity window to provide credit to the NBFC sector. However, the RBI refused to pay heed to the government requests which in turn led to the government looking at an hitherto unused Section 7 under the RBI Act to direct the RBI for a special liquidity window. The RBI stepped up liquidity injections after signs of strain emerged in some parts of the money market. In September, the RBI conducted two open market operations. It also allowed an additional carve out from the SLR kitty of banks, which could be used to meet Liquidity Coverage Ratio requirements. Even in the normal course of things, the RBI had anticipated tighter liquidity conditions in the second half. According to a Care Ratings report, faced with a stressed liquidity position that has made fund raising from the markets challenging, the NBFC sector has been increasingly turning to banks for their fund requirements. Reserve Bank India Home Business Banking and Finance RBI set to inject Rs 40,000 crore into the system in December Download the Indian Express apps for iphone, ipad or Android news Technology News India News Lottery Result Horoscope PUBG Mizoram, MP Election 2018 Realme U1

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