The Reserve Bank of India (RBI) on Friday made an announcement pertaining to the resumption of operations under the revised liquidity management framework, indicating that it will soon be unwinding the Covid-related relief measures announced in March 2020.
According to the official communiqué of the bank, the return to the revised framework will be undertaken in a phased manner and the regulator will perform a Rs 2-lakh-crore variable rate reverse repo auction on January 15 as per the revised liquidity management framework.
“On a review of evolving liquidity and financial conditions, it has been decided to restore normal liquidity management operations in a phased manner,” the RBI said in a statement.
Earlier in February last year, the central bank had announced a revision in the liquidity management framework that illustrated the objectives and toolkit for liquidity management. The framework was then suspended due to the outbreak of Covid-19. The central bank back then decided to make a window dedicated to fixed-rate reverse repo and marginal standing facility operations available throughout the day. This was intended to offer eligible market participants with greater flexibility in their liquidity management.
Amid the pandemic, the regulator also trimmed down the trading hours for various market segments with effect from April 7, 2020. Later with the rollback of the lockdown, RBI restored the trading hours for markets in a phased manner with effect from November 9, 2020.
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