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'OMO auctions a positive from the RBI policy'

Indranil Pan, Chief Economist, Kotak Mahindra Bank

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Krishna Merchant Mumbai
Last Updated : Jan 21 2013 | 6:57 AM IST

Indranil Pan, Chief Economist, Kotak Mahindra Bank talks to Krishna Merchant on today's RBI policy review and the likely impact.

Was the Reserve Bank of India's mid-quarter policy in-line with your expectation?

The policy was in-line on the rate front. We were not looking at the open market operation (OMO) auctions expansion that RBI has announced. This is definitely a positive out of the policy.

How do you see liquidity panning out given the statutory liquidity ratio (SLR) reduction of 1% and open market operation (OMO) auctions worth Rs 48,000 crore?

The RBI has said that they need liquidity at plus/minus 1 per cent of net demand and time liabilities (NDTL). This will bring us close to 1 per cent of NDTL. The RBI does not want to signal a positive liquidity scenario because we are still in ant-inflationary mode.

However, given the current liquidity deficit of about Rs 1,00,000 - 1,10,000 crore, the liquidity infusion of Rs 48,000 crore will definitely help.

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First Published: Dec 16 2010 | 1:29 PM IST

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