Govt raises MSS ceiling to Rs 6 lakh crore to manage bank’s liquidity

New Delhi, December 2: On the recommendation of RBI, the government on Friday sky-rocketed the ceiling for the issue of securities under the Market Stabilisation Scheme (MSS) to 6 lakh crore from the existing Rs. 30,000 crore.

The move is to facilitate liquidity management operations by the Reserve Bank of India in the current scenario where banks are receiving massive deposits following demonetisation of Rs. 500 and Rs. 1,000 currency notes. The RBI said it will also set the stage for withdrawal of incremental CRR.

“In order to facilitate liquidity management operations by the RBI in the current scenario, the Government has, on the recommendation of the RBI, decided to revise the ceiling for issue of securities under the MSS to Rs. 6,000 billion,” said RBI in a statement.

Earlier, RBI had asked banks to temporarily maintain an incremental cash reserve ratio of 100 percent.

After the incremntal CRR too place, the RBI Governor Urjit Patel had said : While the RBI has a significant stock of Government securities available, we felt that if the increase in deposits continues, we may fall short, hence the decision (to increase CRR). Once the Government issues adequate quantum of MSS bonds, which they have promised to, we will immediately review the incremental CRR.

Wefornews Bureau

 

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