"The RBI seized the day on April 6 by not sucking out the excess liquidity via a permanent and blunt tool (like OMO sales or CRR hike). Pushing up the reverse repo rate is expected to raise these and bring back some normalcy," HSBC added. MSF is RBI's overnight lending rate for banks against government securities.5 per cent..Following demonetisation, excess liquidity of around Rs 4 trillion was sloshed around in the banking system and had distorted the short end of the yield curve, the report said..There are, however, some risks associated with this move..75 per cent.," HSBC said in a research note. by not sucking out liquidity.

The Reserve Bank has to be watchful of any inflationary pressures post a pick up in demand, and the central bank will also need to make sure that banks are not parking funds in unproductive or risky avenues, the note said.RBI seized the day on April 6 by not sucking out the excess liquidity via a permanent and blunt tool (like OMO sales or CRR hike)."Several short term money market rates such as the CBLO and the T-Bill rates had moved significantly below the repo rate.The Marginal Standing Facility, on the other hand, has been revised downwards by 0.New Delhi: The Reserve Bank "killed several birds with one stone" in its policy meet on # April 6 by not sucking out excess liquidity with its permanent tool like open market operations (OMO) and CRR hike, an HSBC report says..25 per cent but increased reverse repo rate to 6 per cent from 5. 

Rather, it aims to mould it gently to give desirable behavioral change a fair shot," the report added."The RBI, in our view, had its 'carpe diem' moment. Instead, by outlining its inclination for 'variable reverse repo auctions with a preference for longer term tenors'. end-ofTags: rbi, hsbc, open market operations, crr hike, monetary policy committeeLocation: India, Delhi, New Delhi.

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