The Reserve Bank of India Deputy Governor, Dr Subir Gokarn, today said the RBI will not relax the quantum of deposits banks have to park with the central bank, dubbed the cash reserve ratio (CRR), to ease current liquidity pressures.
“Not at the moment. CRR is being seen by us as a part of a monetary dashboard. To use it in a sort of tactical liquidity management sense, I think we are not at that point,” Dr Gokarn told reporters on the sidelines of a conference here.
The CRR stands at 6 per cent at present and has not been changed for over a year now.
The RBI had yesterday announced it will buy Rs 10,000 crore of government bonds from the market through open market operations (OMO) on November 24, which is reportedly aimed at easing pressures on liquidity and interest rates.
With the busy season for credit picking up, banks are reportedly borrowing up to Rs 1 lakh crore every day from the repo window.
According to reports, the move can also be aimed at easing pressures on yields, as the RBI was unable to carry out three bond sales because investors were asking for higher yields than what the RBI was offering.
”... The OMO is the obvious market—based tactical move.
It does not send a signal of change in the monetary policy stance, which the CRR always runs the risk of doing,” Dr Gokarn said.
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