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RBI indicates slow departure from ultra-loose liquidity policy

RBI to restore liquidity operations timing to normal hours in a phased manner, to start with variable rate reverse repo window from Jan 15

RBI
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Experts say the restoration of normal hours point to a slow exit, but not adopting a tight liquidity policy. Photo | Bloomberg

Anup Roy Mumbai
The Reserve Bank of India (RBI) on Friday signalled a withdrawal of ultra-loose monetary policy by restoring normal liquidity management operations in a phased manner following “a review of evolving liquidity and financial conditions". 

To begin with, the 14-day variable rate reverse repo auction will be conducted between 11.30 to 12 noon from January 29. However, for now, the fixed rate reverse repo and marginal standing facility (MSF) operations will continue to be available throughout the day.  

The restoration of normal hours, according to the central bank, is on a par with other measures taken for the various market segments. For example,

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