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Reserve Bank of India's Market Stabilization Scheme for liquidity

 

 

Reserve Bank of India Market Stabilization scheme to handle liquidity

RBI hikes the ceiling of Market Stabilization Scheme (MSS) from Rs.30, 000 crore to Rs.6 lakh crore to tackle the liquidity crisis.

Shaktikanta Das, Secretary of Economic Affairs announces that RBI is to operate within the limits as per requirement and whatever liabilities come in this year will be absorbed in Budget provisions for interest payments.

RBI also auctioned the 28-day Cash Management Bills (CMB) of Government of India worth Rs.20,000 crore and the announcement was made within  few minutes of increase in MSS ceiling.

Cash Management Bills to have the generic character of Treasury bills

Banks have reported deposits around Rs.10 lakh crore since November 8 after the withdrawal of legal tender of Rs.500/1000 denomination notes.

As a part of liquidity management exercise, RBI last week asked lenders to temporarily maintain an incremental cash reserve ratio (CRR) of 100%.

CRR is the portion of deposits banks are required to park with RBI.

 


 

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