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Monday, 23 March, 2020, 17 : 30 PM [IST]

RBI injects liquidity of INR 1 lakh cr via repo window

Amid the escalating Coronavirus pandemic, the Reserve Bank of India (RBI) has announced large liquidity injections via repo window under the Liquidity Adjustment Facility, reports The Republic. The Central bank stated that it will offer INR 1 lakh crore to all banks via repo operations. The move comes as an attempt to prevent the freeze of credit in markets in view of the Coronavirus crisis which has brought the country to a near standstill. 

Of the total amount, INR 50,000 crore will be offered on Monday and the remaining on Tuesday. Meanwhile, agencies have reported that the Central Bank might accept corporate bonds as collateral, however, a certain tweak to the existing rules would be required to permit that. In another attempt to avoid the market freeze, the RBI has also announced that it is planning to bring forward bond purchases under its open market operation. 

The Central Bank will purchase INR 15,000 crore in government bonds on March 24 and on March 26 as well. For the past few days, RBI has introduced several measures to keep the market liquid. This includes USD 4 billion in foreign exchange swaps to provide dollar liquidity, purchase of  INR 40,000 crore in government bonds and INR 1 lakh crore in long term repo operations where banks can raise funds for 1-3 years at the repo rate. (Source: The Republic)

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