RBI to inject Rs 40,000 crore in November

“The open market operation amount stated is indicative and the RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions,” it said. The RBI had earlier stated that the system liquidity will move into deficit in the second half of 2018-19 and the evolving liquidity conditions would determine its choice of instruments for both transient and durable liquidity management.

The RBI injection of more funds comes at a time when the liquidity squeeze for non-banking financial companies (NBFCs) is set to intensify in the next few months with an estimated Rs 80,000-100,000 crore of their debt papers coming up for redemption between November and March. Even as the government and the Reserve Bank of India have taken certain measures to open liquidity taps, deteriorating condition in the financial markets have made it difficult for several NBFCs to roll over their existing obligations at attractive rates.

Unlike banks, NBFCs do not have access to low-cost public deposits and have to heavily rely upon commercial paper and commercial debt markets. The continuing defaults by Infrastructure Leasing & Financial Services (IL&FS) group on its debt obligations have jolted the debt raising plans of many NBFCs.