Bloomberg News

Subbarao Says RBI Needs to Reduce Banks’ Holdings of India Bonds

March 09, 2012

Reserve Bank of India Governor Duvvuri Subbarao comments on the statutory liquidity ratio, or the proportion of deposits lenders need to invest in government bonds. He was speaking in the western Indian city of Pune today.

“Indian banks are holding a high amount of government bonds because the fiscal deficit is high.

‘‘It also happens because the Reserve Bank of India has prescribed a statutory liquidity ratio requirement of 24 percent, considered by many people as high, on banks. Going forward, we need to reduce it but there are a number of preconditions which have to be met.’’

To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net


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