RBI increases ceiling on Market Stabilisation Scheme to Rs 6,000 bn

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Chennai, Dec 2 (IANS) In an attempt to manage the liquidity surplus following demonetisation of Rs 500/1,000 notes, the central government, on Reserve Bank of India’s (RBI) advice, on Friday revised upwards the ceiling for issue of securities under the Market Stabilisation Scheme (MSS) to Rs 6,000 billion.

In a statement, the RBI said: “After the withdrawal of the legal tender character of the Rs 500 and Rs 1,000 denomination notes with effect from November 9, 2016, there has been a surge in the deposits with the banks.

“Consequently, there has been a significant increase of liquidity in the banking system which is expected to continue for some time.”

In order to facilitate liquidity management operations by RBI in the current scenario, the governmenthas, on RBI’s recommendation, decided to revise the ceiling for issue of securities under MSS to Rs 6,000 billion, it added.

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In June 2016, the ceiling for the outstanding balance under MSS for 2016-17 was fixed at Rs 30,000 crore.



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