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RBI announces liquidity steps to ease tight banking conditions
RBI plans to inject about $32 billion into the banking system via bond purchases and FX swaps to ease liquidity stress and stabilise short-term rates.
The Reserve Bank of India on December 23 announced measures to inject nearly $32 billion of liquidity into the banking system through bond purchases and a dollar rupee swap. The move aims to ease tight liquidity conditions caused by advance tax outflows and forex interventions. Bond traders said the steps could help stabilise short term rates and support credit growth, though year end balance sheet pressures may limit immediate transmission.