Friday, 2 December 2016

RBI revises Market Stabilisation Scheme limit to Rs 6 lakh cr

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After the withdrawal of the legal tender character of the Rs 500 and Rs 1000 denomination notes with effect from November 9, 2016, there has been a surge in the deposits with the banks. Consequently, there has been a significant increase of liquidity in the banking system which is expected to continue for some time. In order to facilitate liquidity management operations by the Reserve Bank of India in the current scenario, Government of India has on the recommendation of the Reserve Bank of India, decided to revise the ceiling for issue of securities under the Market Stabilisation Scheme (MSS) to Rs 6 lakh crore. 

The earlier limit was Rs 30,000 crore. A lot of money is lying in branches, which can't be moved to currency chest. Only when we move it to the currency chest, it will be counted as CRR. One purpose is to reduce the liquidity till the money goes out, he said. These bonds will mostly likely sell after December 9.

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