No liquidity worries in banking system, says RBI
10 Sep 2012
The banking system in India is comfortably liquid and there are no signs of stress in the financial system to warrant any easing of monetary policy, Subir Gokarn, deputy governor of the Reserve Bank of India (RBI), has said.
"For the last several weeks, liquidity levels have been within comfort zone. We have not for quite some time felt that there was stress in the market, both in terms of quantity of LAF borrowing (liquidity adjustment facility) and in terms of behaviour of call rate," Gokaran said on the sidelines of a National Finance Symposium organised by the Indian Institute of Foreign Trade.
Cash reserve position of scheduled commercial banks stood at Rs2,96,143 crore at the close of trading last week against average daily cash reserve requirement of Rs3,15,690 crore for the fortnight ended 7 September 2012.
The overall LAF borrowing by the banking system is well within the RBI's comfort zone of one per cent of net demand and time liabilities.
Banks borrowed around Rs39,150 crore at the 3-day repo auction during the fortnight ended 7 September 2012 while they deposited Rs5,445 crore to the Reserve Bank o India.
Gokarn said the RBI as always has been comfortable with the level of forex reserves.
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