Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
The Reserve Bank of India (RBI) has prepared a roadmap to suck out the surplus liquidity by over Rs 5 lakh crore by December, the Times of India has reported. RBI Governor Shaktikanta Das has, however, said that the central bank does not want to “rock the boat” by sudden reduction in liquidity.
The central bank in response to the Covid-19 pandemic had earlier injected additional liquidity into the system. The surplus liquidity in the system is estimated at Rs 10,000 crore.
The Times of India reported that the RBI move “as good as it gets for borrowers” as the withdrawal of liquidity will put pressure on bond yields, which could eventually get passed on to loans.
Liquidity measures to support growth
After the monetary policy meeting the governor on Friday said surplus liquidity is at an average of Rs 9.5 lakh crore in October so far. The potential liquidity overhang amounts to more than Rs 13 lakh crore, he added.
According to the Times of India report, reduction in surplus liquidity is aimed at bringing down its borrowings from banks (under the reverse repo operation) to Rs 2-3 lakh crore by December this year. It is currently around Rs 8.8 lakh crore, the news report added.
The newspaper quoted Mallikarjuna Rao, MD and CEO, Punjab National Bank, as saying: “The gradual and calibrated unwinding of liquidity measures will support growth, while keeping inflation under control.”
The RBI has decided to maintain the status quo in the monetary policy, after its bi-monthly Monetary Policy meeting during October 6-8. The six-member Monetary Policy Committee (MPC) of RBI kept the key lending rate (repo rate) unchanged at 4%. The reverse repo rate remained unchanged at 3.5%. The policy stance was kept unchanged at ‘accommodative’.
Das said the MPC voted to maintain an accommodative stance “as long as necessary to revive and sustain growth and mitigate the impact of Covid-19 pandemic while ensuring inflation remains within the target”. The reverse repo rate also remains unchanged at 3.35%.