Reserve Bank Governor Shaktikanta Das on Thursday said the central bank’s asset purchases, aimed at mitigating Covid-19-related liquidity stress in the system, did not dilute its balance sheet or compromise on core principles of central banking.
In the wake of the pandemic, the RBI undertook several conventional and unconventional measures.
“Unlike many central banks, the RBI’s asset purchases did not dilute its balance sheet and hence, did not compromise on core principles of central banking,” Das said while addressing an event organised by the Bombay Chamber of Commerce.
These purchases were confined to risk-free sovereign (government) bonds including state government securities only, he said. Other than conventional measures, RBI introduced long term repo operations (LTROs) and targeted long term repo operations (TLTROs) to augment the system as well as sector-specific liquidity to meet sectoral credit needs and alleviate stress, he said. Special refinance facilities were provided to select All India Financial Institutions (AIFIs), while a special liquidity facility for mutual funds (SLF-MF) was introduced to ease redemption pressures, he added.