Liquidity in the banking system is expected to remain in deficit mode because of factors like currency leakage from the system, high government cash balance with Reserve Bank of India (RBI), experts said.
According to some economists, the banking system may face liquidity deficit to the tune of Rs 1.5 trillion till September 2013 compared to Rs 1 trillion at the end of March 2013.
Therefore, economists expect RBI to infuse liquidity in the system through tools like open market operation (OMO).
The central bank may infuse around Rs 600 billion liquidity largely through OMOs during Apr-Sep 2013, some economists said.
Management of government’s cash surplus will be crucial in 2013-14 to reduce the seasonal skewness in liquidity. With maneuverability on monetary policy front becoming limited in 2013-14, RBI should focus on proactive liquidity management to maintain its policy stance in accordance with the overall growth-inflation mix, economists opine.
Liquidity deficit remained above comfort in Oct-Mar 2012-13 owing to currency leakage and government cash surplus.
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