RBI to call out liquidity skew with bankers
Reserve Bank of India is likely to meet with banks next week to discuss the key issues of liquidity in the banking system and developments in sovereign debt yields, which serve as benchmarks for pricing corporate borrowing.
«There are meetings scheduled on November 2 and November 3. The discussion points include the skewed liquidity distribution in the banking system and the reasons why some banks deploy excess liquidity at the RBI's Standing Deposit Facility (SDF) and why some banks which are short of liquidity often have to take recourse to borrowing from the Marginal Standing Facility (MSF),» a person aware of the matter said, asking not to be named.
«The RBI's plan regarding open market bond sales is also likely to come up for discussion.
There is a lot of speculation in the market regarding the timing and the choice of securities that the RBI may use for bond sales,» another person said.
The meetings come at a time when the RBI is trying to find a solution to the liquidity conundrum that is baffling both the regulator and banks. The RBI is urging lenders to lend out surplus funds in the interbank call money market instead of parking them at the central bank's absorption facility.
An email sent to the RBI seeking comment for the story remained unanswered till press time.
In an unexpected step, RBI Governor Shaktikanta Das said on October 6 that the central bank would hold open market bond sales to drain out excess liquidity in the banking system.
