Liquidity, smooth government borrowing to be ensured: RBI

February 6th, 2009 - 6:57 pm ICT by IANS  

Mumbai, Feb 6 (IANS) Reserve Bank of India (RBI) Governor D. Subbarao Friday said he will ensure enough liquidity in the financial system and manage the government’s borrowing programme in the “least disruptive” manner.He also said that the holding company, or special purpose vehicle, that was proposed in the second stimulus package of the government to fund non-banking finance companies will be operational next week.

“We will maintain comfortable liquidity positions. There are various options and various measures. We will explore and apply them as appropriate,” Subbarao said on the margins of a conference at the Indira Gandhi Institute of Development Research here.

“We will also see that the market is stable. We see that there is no volatility. We will manage the government’s borrowing program in a most efficient fashion,” the central bank governor added.

“We will also manage the borrowings in the least disruptive manner.”

Even though the RBI left key rates unchanged at the monetary policy review last month, it has been intervening at regular intervals since September last year, injecting additional liquidity worth Rs.3.88 trillion (Rs.388,000 crore/$77.5 billion).

In the context of liquidity, Subbarao also spoke about the special purpose vehicle that was proposed in the second stimulus package of Jan 2 to extend credit worth Rs.25,000 crore (Rs.250 million) to non-banking finance firms.

“I believe the special purpose vehicle we had talked about in the policy will become operational from next week or so and that will substantially ease the problems for non-banking finance companies.”

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