The RBI on Friday mentioned it has determined to restore normal liquidity management operations in a phased manner and can conduct variable fee reverse repo public sale of Rs 2 lakh crore on January 15. In February final yr, RBI had introduced a revised Liquidity Management Framework (LMF) that was simplified and “clearly communicated” the goals and toolkit for liquidity management.
However, in view of the COVID-19 outbreak, the quickly evolving monetary situations and considering the influence of disruptions due to the lockdown, RBI had determined to briefly droop the revised LMF and the window for Fixed Rate Reverse Repo and Marginal Standing Facility (MSF) operations have been made obtainable all through the day.
This was supposed to present eligible market contributors with higher flexibility in their liquidity management.
“On a review of evolving liquidity and financial conditions, it has been decided to restore normal liquidity management operations in a phased manner,” RBI mentioned.
Accordingly, it should conduct a Variable Rate Reverse Repo public sale on January 15, 2021 underneath the revised LMF issued on February 6, 2020. The notified quantity is Rs 2,00,000 crore, it mentioned.
RBI additional mentioned the Fixed Rate Reverse Repo and MSF operations will proceed to be obtainable all through the day.
“As stated in the last MPC (Monetary Policy Committee) statement on December 4, 2020, it is reiterated that the Reserve Bank will ensure availability of ample liquidity in the system,” the central financial institution added.
In view of operational dislocations and elevated degree of well being dangers posed by COVID-19, RBI had additionally determined to truncate buying and selling hours for varied market segments with impact from April 07, 2020.
Later, with the graded easing of lockdown restrictions, it was determined to restore buying and selling hours for markets regulated by the Reserve Bank in a phased manner with impact from November 9, 2020.