{"id":36549,"date":"2025-01-31T18:56:07","date_gmt":"2025-01-31T13:26:07","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=36549"},"modified":"2025-01-31T18:56:08","modified_gmt":"2025-01-31T13:26:08","slug":"rbi-liquidity-injection-measures","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/31-01-2025\/rbi-liquidity-injection-measures","title":{"rendered":"RBI\u2019s Liquidity Injection Measures"},"content":{"rendered":"\n<p><strong>Syllabus :GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In News<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <a href=\"https:\/\/www.nextias.com\/blog\/reserve-bank-of-india-rbi\/\"><strong>Reserve Bank of India (RBI) <\/strong><\/a>has announced enhanced <strong>liquidity measures<\/strong> to address contraction in the banking system.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Steps Taken<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Swap auction: <\/strong>RBI will conduct a six-month USD\/INR buy\/sell swap auction worth $5 billion, with the first leg on January 31, 2025.\n<ul class=\"wp-block-list\">\n<li>This involves banks selling US dollars to the RBI in exchange for rupee funds, to be reversed after six months with a premium.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>OMO Purchases: <\/strong>The RBI will conduct open market operation (OMO) purchase auctions of Government Securities (G-Secs) totaling \u20b960,000 crore in three tranches of \u20b920,000 crore each on January 30, February 13, and February 20, 2025.<\/li>\n\n\n\n<li><strong>VRR Auction<\/strong>: A 56-day Variable Rate Repo (VRR) auction for \u20b950,000 crore will be held.\n<ul class=\"wp-block-list\">\n<li>This is the first time such a long-tenor VRR auction is being conducted.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Need and Objectives\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The measures are expected to infuse around \u20b91.50 lakh crore into the banking system in a phased manner, from January 30 to February 20, 2025, providing much-needed durable liquidity to address the liquidity deficit in the banking system.\n<ul class=\"wp-block-list\">\n<li>The liquidity deficit was exacerbated by a sharp depreciation of the rupee and reduced government spending.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The RBI&#8217;s actions are in response to liquidity tightness due to tax outflows and limited government spending, with the liquidity deficit estimated at \u20b93 lakh crore.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The government\u2019s over-borrowing and investing surplus cash could impact liquidity management, leading to prolonged surplus or deficit cash positions.<\/li>\n\n\n\n<li>This weak cash management could have negative consequences for RBI\u2019s debt management, liquidity, and overall monetary policy.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Suggestions and Way Forward\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The continued fiscal imbalance between surplus\/deficit cash positions requires greater coordination between RBI and the government to prevent negative impacts on monetary and liquidity management.<\/li>\n\n\n\n<li>The RBI is committed to agile and flexible liquidity management to support economic stability.<\/li>\n\n\n\n<li>The recent measures highlight RBI&#8217;s proactive approach to ensuring sufficient liquidity in the banking system to stabilize financial conditions.<\/li>\n\n\n\n<li>The RBI will monitor evolving liquidity and market conditions and adjust measures as needed to ensure orderly liquidity in the system.<\/li>\n<\/ul>\n\n\n\n<p>Source :TH<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Reserve Bank of India (RBI) has announced enhanced liquidity measures to address contraction in the banking system.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-36549","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36549","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=36549"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36549\/revisions"}],"predecessor-version":[{"id":36550,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36549\/revisions\/36550"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=36549"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=36549"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=36549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}