RBI to step in if liquidity deficit persists: H R Khan
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RBI to step in if liquidity deficit persists: H R Khan

Last Updated: Monday, November 26, 2012, 09:31
 
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RBI to step in if liquidity deficit persists: H R Khan
Pune: Deputy Governor H R Khan today said the RBI will "take action" if the current spate of liquidity deficit continues for long.

"It's (the liquidity deficit) short term, very short term. It may pass off, if it is slightly longer, we will take action. If it is longish, if the liquidity shortness continues, we will take action," Khan told reporters on the sidelines of the annual Bancon.

He, however, did not specify any particular tool, the apex bank will adopt to tide over the problem.

Banks have been borrowing close to Rs 1 lakh crore per day from the Reserve Bank's repo window lately, which is higher than the normal.

Khan said the liquidity is constrained due to higher government borrowing and the ongoing festive season.

The RBI has primarily resorted to government bond buybacks or open market operations to infuse liquidity into the system in the recent past.

Khan said the RBI initiative of having white label automated teller machines has received "good response" from players having a domain knowledge in the technology.

The RBI had in June issued final norms for setting up white label ATMs, under which non-bank companies can install the machines.

The government proposal to kickstart direct cash transfers of subsidies will help the banking system, Khan said, adding that banks will also get a chance to cross-sell other products as a result of the fund flows.

The government spends over Rs 3 lakh crore in subsidies and it will also help reduce pilferages, he said.

Minister of state for Finance Namo Narayan Meena, who gave the valedictory address at the conference, said the banks should reduce interest rates by increasing their operational efficiency.

He also said that the bad loans adversely affect the financial health of banks which should be solved through the intensive use of technology.

PTI



First Published: Monday, November 26, 2012, 09:31


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