KOLKATA, Dec 7 (Reuters) - The Indian banking system
liquidity deficit is within comfort zone and the central bank
will take more steps to address the deficit if needed, the
Reserve Bank of India Deputy Governor Subir Gokarn said on
"An OMO (open market operation) gives us the flexibility to
respond in very short order to stresses," Gokarn told reporters
on the sidelines of an industry event.
"So, if we see them remaining in the system, then obviously
we have the capacity to respond to them," he said referring to
the liquidity stress.
Last week, the RBI resumed bond purchases through the open
market after a span of five months to offset the impact of
expected cash outflows as corporates start paying taxes ahead of
the Dec. 15 deadline.
The banking system's liquidity shortage has stayed above the
central bank's stated comfort zone since the middle of last
month due to festive season withdrawal of funds from banks and
the slow pace of government spending.
Banks borrowed over a trillion rupees for 11 consecutive
sessions last month, compared with RBI's comfort zone of about
700 billion rupees ($12.89 billion).
(Reporting by Shamik Paul; Editing by Prateek Chatterjee)