RBI may purchase $18bn in government bonds to maintain banking liquidity

  • India’s central bank may buy 1.5 trillion rupees ($18 billion) in government bonds to keep liquidity in the banking sector amid scheduled state elections.
  • Excess liquidity narrowed to about 740 billion rupees from this year’s high of 3 trillion in April.
  • RBI may cut the cash reserve ratio by half a point in fiscal H2 and start buying bonds in Q4 to preserve banking liquidity, says ICICI Bank’s B. Prasanna.


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