Inviting applications for Residential Batch FRC-6 Click Here to know more and Entrance Test Registration
RBI to inject extra liquidity of ₹1 lakh cr.
Context:
- The Reserve Bank said it would inject additional liquidity of ₹1 lakh crore in banks through longer tenor instruments to enable flexibility towards meeting their fund needs.
Introduction:
- This will be in addition to normal Liquidity Adjustment Facility (LAF) operations.
- The RBI will conduct four variable rate term repo auctions of ₹25,000 crore each in March 2018.
Rationale behind this decision:
- To address additional demand for liquidity.
- To providing flexibility to the banking system in its liquidity management.
- The proposed injection of additional liquidity will help cap the short-term rates and also aid in lowering the rate volatilities for the rest of the month.
Liquidity adjustment facility (LAF) :
- Liquidity adjustment facility (LAF) is a monetary policy which allows banks borrow money through repurchase agreements.
Discover more from Free UPSC IAS Preparation Syllabus and Materials For Aspirants
Subscribe to get the latest posts sent to your email.
