- The Reserve Bank of India on Monday announced another round of facility to inject liquidity of up to Rs.12,000 crore in the system, which is facing cash shortage due to the busy credit season and impending advance tax payments.
- Liquidity injection would be on December 15 through open market operations, under which the RBI pumps in money by purchasing government securities held by banks.
- The government securities, which the RBI will purchase this time, are to mature in 2016, 2017, and 2022.
- The Reserve Bank announced similar programme last week for injecting up to Rs.12,000 crore but had pumped in a little over Rs.10,000 crore.
- The liquidity crunch in the system can be gauged from the fact that the RBI injected over Rs.1 lakh crore through the repo (short-term lending against government securities) window today itself.
- The RBI had also blamed high cash balance with the government for aggravating liquidity strain in the system and asked it to loosen purse strings for easing the situation.
Govt. to spend more
"We expect the government to spend and reduce the cash balance and ease the liquidity position. Although the government is spending, it is not enough," Dr. Subbarao had said in Kolkata.
He had said the government was sitting on huge cash balances it got from higher than expected receipts from 3G spectrum auction, disinvestment and indirect-tax collections.
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