iifl-logo

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

sidebar image

RBI Monetary Policy: ICRA comments on Banking sector

10 Feb 2022 , 02:15 PM

On Extension of Term Liquidity Facility of Rs50,000cr to Emergency Health Services and Extension of On-tap Liquidity Window for Contact-intensive Sectors

“One of the incentives for banks to disburse under these schemes was a 40 bps higher rate on surplus liquidity parked by banks with RBI. So effectively banks earned 3.75% on their surplus liquidity, however, the liquidity was parked under a 14-day reverse repo.

Since these notifications during the last year, the RBI has commenced Variable Rate Reverse Repo (VRRR) auctions, where liquidity is being absorbed for shorter tenor VRRR at rates higher than 3.75%. Hence the incentive for lenders to disburse under these schemes will not be driven by these incentives and accordingly, the liquidity parked by banks under reverse repo through this scheme stood nil as on February 9, 2022.”

On hike in Voluntary Retention Route (VRR) — Enhancement of Limits

“The enhancement of VRR limits for investments by foreign portfolio investors by Rs1.0 trillion to Rs2.5 trillion is a positive move, as the prevailing VRR limits are nearly exhausted, even as the overall FPI investments in Government securities and Corporate bonds has been on a declining trend over the past few years. While this enhancement in limits may pull in some additional funds amidst the rise in planned government borrowings, overall FPIs flows are likely to remain muted in the near term, given the concerns on India’s fiscal deficit as well as rising rates in developed economies.”

The author of this article is Mr. Anil Gupta, Vice President & Co-Group Head, ICRA

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com

Related Tags

  • Coronavirus
  • Government of India Securities
  • RBI
  • RBI announcement
  • RBI governor
  • RBI rate cut
  • Reserve Bank of India
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More
Knowledge Center
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Capital Services Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Loading...

Follow us on

facebooktwitterrssyoutubeinstagramlinkedintelegram

2025, IIFL Capital Services Ltd. All Rights Reserved

ATTENTION INVESTORS

RISK DISCLOSURE ON DERIVATIVES

Copyright © IIFL Capital Services Limited (Formerly known as IIFL Securities Ltd). All rights Reserved.

IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)

ISO certification icon
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.