Kolkata: The Reserve Bank of India Governor D Subbarao said today that the Central Bank was deeply conscious of the liquidity situation. He also added that government spending was not large enough and as on Wednesday federal balances with the central bank stood at $20.2 billion.
Cash has remained tight, with banks borrowing around 1 trillion rupees daily from the central bank's repo auctions since the beginning of November, following withdrawals by depositors for festivals and due to sluggish government spending.
When asked about the loan scam that led to the arrest of senior bank officials and the Chairman of LIC Housing Finance, he said all loans in an ongoing bribes-for-loans investigation were sanctioned under established rules. Subbarao told that 13 out of the 14 loan accounts in the probe were performing.