How government is stepping up efforts to ease liquidity? - Letsdiskuss
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leena legants

Blogger | Posted 16 Nov, 2018 |

How government is stepping up efforts to ease liquidity?

Avichal Singh

Project Manager at The Economic Times | Posted 02 Dec, 2018

India is facing worst liquidity crunch in the banking system in two years. The risk is adding to refinancing risks for shadow banks shaken by a rare default in the country’s money markets.
Prime Minister Narendra Modi led government has sought support for financial markets to combat with the current situation in India. The government has also sought support and recommendation on this from other agencies.

The financial institutions in India have given following suggestions to further ease up liquidity into the system:

1. Dedicated liquidity window for NBFCs
2. Reduce the minimum tenor of external commercial borrowing for housing finance companies to 3 years from five years earlier.
The Reserve Bank of India or RBI, which regulates banks and financial institutions in India, responsible to manage money supply or liquidity into the system.

Time to time RBI panel on monetary policy meets and announces regulatory norms to maintain liquidity in India.

Here’s a snapshot of latest liquidity operations by RBI