Banking liquidity

MUMBAI: Cash conditions in Indian banking system are balanced and central bank will inject long-term funds if needed, said Governor Raghuram Rajan on Tuesday. Interbank liquidity tightened sharply in November with banks seeing large amount of deposit withdrawals by public for festival spending. That has created a shortage of funds as this cash typically comes back to banks after a lag of few months. Tight liquidity was one of the factors to push up benchmark 10-year bond yield 15 basis points in November. Rajan was speaking to analysts at a teleconference after announcing monetary policy statement, where he kept the policy rate unchanged at 6.75 per cent. — Reuters