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RBI has ensured liquidity via TLTRO extension: PNB’s SS Mallikarjuna Rao

Updated : April 07, 2021 12:45 PM IST

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday kept the benchmark repo rate unchanged at 4 percent in the April policy while maintaining an accommodative stance for as long as necessary amid rising inflation.

Reacting to the policy, SS Mallikarjuna Rao, MD and CEO at Punjab National Bank (PNB) said that overall the policy is on expected lines. He also expects demand to come back once COVID recedes.

“Overall it is a good policy, on expected lines to continue the liquidity in the market, continue the supply side in the market. We will have to wait and see how the pandemic impact will recede more effectively to create the demand,” he said.

The RBI has also extended the deadline for the TLTRO on-tap scheme by six months. Rao said that currently there is a good amount of liquidity available in the system, but the extension is a good opportunity if the demand increases.

“It is one more opportunity in case there is a liquidity reduction. The RBI governor has told that liquidity at Rs 4 lakh crore currently, they would like to manage, they are not going to control or tighten that. So, if you ask me, as on today there is good amount of liquidity available and so bankers may not go to TLTRO specifically at this point of time. However, it would be facility available in the days to come. By extending it to September 30 there is a clear window opened and under any circumstance in terms of demand increasing the TLTRO would be available. So there won’t be any liquidity crunch,” he said.

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