• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

New Delhi, Oct. 11 Liquidity management will continue to receive priority in the hierarchy of policy objectives of the Reserve Bank of India over the period ahead, the RBI Deputy Governor, Dr Rakesh Mohan, has said.

This stance comes at a time when the domestic banking system was faced with tight liquidity conditions, forcing the RBI to cut cash reserve ratio by 150 basis points during this week in order to to infuse about Rs 60,000 crore into the system, effective Saturday.

Addressing IMF’s Financial Stability Forum meeting at Washington, Dr Mohan also noted that the financial crisis in advanced economies could put some upward pressure on domestic interest rates as Indian companies would now rely relatively more on domestic sources of financing, including bank credit.

He pointed out that domestic primary capital market issuances have suffered so far this fiscal in view of sluggish stock market conditions.

On liquidity management, Dr Mohan said RBI would continue with its policy of active demand management of liquidity through CRR stipulations as well as open market operations, using all the policy instruments at its disposal flexibly.

Stating that active liquidity management was a key element of the current monetary policy stance, Dr Mohan said liquidity modulation through a flexible use of a combination of instruments has, to a significant extent, cushioned the impact of the international financial turbulence on domestic financial markets by absorbing excessive market pressure and ensuring orderly conditions.

More Stories on : RBI & Other Central Banks | Financial Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line