Business Other News 01 Apr 2016 SBI expects RBI to a ...

SBI expects RBI to address systemic liquidity issues in policy

PTI
Published Apr 1, 2016, 6:15 pm IST
Updated Apr 1, 2016, 6:15 pm IST
RBI is scheduled to announce this fiscal's first bi-monthly monetary policy on April 5.
This step will provide a clear picture of the money available within the system which will not get distorted by government borrowing.
 This step will provide a clear picture of the money available within the system which will not get distorted by government borrowing.

Mumbai: Reserve Bank's forthcoming monetary policy review should outline steps to curb the volatility in systemic liquidity, SBI Chairman Arundhati Bhattacharya said on April 1. RBI is scheduled to announce this fiscal's first bi-monthly monetary policy on April 5.

"We expect RBI to address the issues of systemic liquidity," Bhattacharya said in a statement here. Currently, high volatility in currency holdings of public (both in the form of cash and jewellery) as well as government’s cash balances with RBI is leading to volatility in systemic liquidity, she said.

 

"To this end, government’s cash balances may be placed with public sector banks, instead of with RBI, so that the cash remains within the banking system and does not create unnecessary volatility in money markets," she added.

This step will provide a clear picture of the money available within the system which will not get distorted by government borrowing. This step would increase government’s revenue as the funds can be kept in an interest bearing account with the banks, she stated.

Bhattacharya said RBI should examine the reasons for increase in currency holdings with public. RBI may also alleviate the market participants concern about potential dollar shortages in September/ October 2016 related to maturity of special FCNR (B) swaps, she said.

 

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Location: India, Delhi, New Delhi




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