To discuss the prevailing liquidity conditions in the banking system, the Reserve Bank of India is expected to meet senior officials from some banks on November 2nd and Nov 3rd.
A treasury official from a state-run bank said, "The central bank will meet officials at the executive director and chief general manager levels, and a discussion on the liquidity picture is on the agenda, though a formal invite has not yet come."
The proposed meeting with state-run, foreign and private banks comes less than a month as RBI Governor Shaktikanta Das, in his policy statement, urged banks to not park them at the standing deposit facility (SDF) but rather lend in the inter-bank market.
Das said, "It is imperative that banks assess their actual liquidity requirements over the reserve maintenance cycle and bid accordingly in the auctions under main 14-day VRRR (variable rate reverse repo) operations."
He further added, "It is desirable that banks having surplus funds explore lending opportunities in the inter-bank call market rather than passively parking funds in the SDF at relatively less attractive rates."
Greater volume of call money transactions would not only help in deepening the inter-bank money market but also lower the recourse of deficit banks to the marginal standing facility, he added.
As announced in the October monetary policy meeting, market participants are also eagerly awaiting hints on when the central bank would conduct an open market sale of debt. Two sources aware of the development had told Reuters last week that the central bank will commence bond sale, once government spending picks up and the durable liquidity surplus improves. As of October 25th, banking system liquidity is in a deficit of more than one trillion rupees.