To relieve restricted liquidity, RBI provides standalone PDs with an extra Rs 5,000 crore

To relieve restricted liquidity, RBI provides standalone PDs with an extra Rs 5,000 crore

To relieve restricted liquidity, RBI provides standalone PDs with an extra Rs 5,000 crore

A similar statement was issued by the central bank on March 30 of the previous year, along with an increase of liquidity of Rs 5,000 crore.

The RBI said that its evaluation of the current and developing liquidity circumstances served as the basis for this decision.

On January 30, the Reserve Bank of India (RBI) announced that it has chosen to extend the Standing Liquidity Facility to Standalone Primary Dealers (SPDs) by an additional Rs 5,000 crore.

Beginning on January 31, this will be offered at the current 6.50 percent repo rate, according to a press statement from the central bank.

An RBI-registered organization with the ability to purchase and sell government securities is the primary dealer. In India, primary dealers may be classified as either bank primary dealers or freestanding main dealers.

Listed as non-banking financial firms under the firms Act, standalone main dealers are either subsidiaries of foreign corporations or scheduled commercial banks.

According to the central bank, the choice was made after evaluating both the current and potential liquidity situations.

The RBI said in the announcement that each SPD is receiving information on the incremental limit individually.

An approximate of Rs 2.59 lakh crore is the expected shortage in liquidity inside the banking sector. Over the previous several months, the banking system's liquidity remained tight, despite the central bank's efforts to control it via a variety of variable rate repo auctions.

The present announcement is one of five VRR auctions totaling Rs 7.50 lakh crore that the RBI held in January. Banks have bid more than twice as much in recent auctions, demonstrating an enormous demand, but the central bank has only accepted amounts that are almost equal to the amount announced for the sale.

A similar statement was issued by the central bank on March 30 of the previous year, along with an increase of liquidity of Rs 5,000 crore.