RBI calls bankers meet next week on liquidity

Mumbai, Mar 24 (UNI) Reserve Bank of India (RBI) has convened a bankers meeting next week to assess the current liquidity condition in the banking system.

In an interaction with media persons after a function here this evening, Governor Dr Y V Reddy said appropriate action would be initiated after the Central Bank received the feedback from banks on their problems of liquidity. ''We have various instruments to address the issue'', he added.

On the current tightening trend of liquidity, Dr Reddy said this is a ''frictional liquidity'' and not a ''structural'' liquidity problem.

RBI, which is currently undertaking a review of the economic situation including the huge credit offtake from the banking system due to renewed demand from the productive sector of the economy, is expected to announce its measures in its annual monetary and credit policy annoucement on April 28.

Yesterday, top executives of leading public sector banks held a meeting with Finance Minister P Chidambaram and informed him that they had no other options than to increase their prime lending rates (PLRs) in order to overcome the tight liquidity conditions.

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