This, in turn, will help improve the distribution of liquidity in the financial system as a whole,” RBI said in a press release.Bankers said the move is a welcome one at a time when the debt markets are nervous in light of the default of the Rs 91,000 crore debt laden IL&FS. “This will help in curbing some nervousness in the market and also in line with the long term plan of reducing ratios like cash reserve and SLR,” said Jayesh Mehta, head of treasury at Bank of America.The RBI reiterated its commitment to ensure enough liquidity in the banking system. “Going forward, the Reserve Bank stands ready to meet the durable liquidity requirements of the system through various available instruments depending on its dynamic assessment of the evolving liquidity and market conditions,” the central bank said.Permitting banks to consider higher SLR as HQLA, bond buybacks through open market operations (OMO) and liquidity infusion through term repos will help in providing liquidity to the banking system, RBI said. As of September 26, banks had availed of ? 1.88 trillion through term repos from RBI.“As a result of these steps, the system liquidity is in ample surplus”, RBI said.

Source: Economic Times September 27, 2018 08:37 UTC