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The Reserve Bank of India has further extended the relaxation for parking fresh Government Securities (G-Secs) investments made in FY22 in the so-called “Held to Maturity” bucket and also allowed direct retail participation in the primary and secondary G-Sec market.
The aforementioned move is aimed at ensuring that the Government’s ₹12-lakh crore borrowing programme in FY22 sails through without a hitch.
The RBI also decided to continue with the Marginal Standing Facility (MSF) relaxation for a further period of six months — up to September-end 2021, whereby participant banks under the MSF can dip into the statutory liquidity ratio (SLR) by up to an additional one per cent of net demand and time liabilities (NDTL) — cumulatively up to 3 per cent of NDTL. This is expected to unlock ₹1.53 lakh crore liquidity for banks.
The central bank also announced a phased normalisation of the cash reserve ratio (CRR), whereby it will be restored to 3.5 per cent by March 27, 2021 and 4 per cent by May 22, 2021.
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