INSUBCONTINENT EXCLUSIVE:
about two dozen bankers on Monday for feedback on the central bank's new cash infusion tool, according to two bankers who attended the
meeting.While the meeting was aimed at ironing out any procedural issues for implementing the RBI's debut move, it also indicated the
central bank's willingness to smoothen tight cash conditions in the banking system, the bankers said.The RBI will conduct a forward
dollar/rupee buy-sell swap auction worth $5 billion on March 26, its first such move to infuse rupee liquidity into cash-strapped banks
Under this arrangement, the RBI will buy dollars from banks for three years promising a specified premium for selling back the same at
maturity.The announcement has already pushed down the one-year forward premium by 30 basis points to 3.60 per cent."They wanted to
understand if we had any suggestions or issues with the implementation of the auction because it is a first for them as well," said one of
the bankers."They also didn't say no to suggestions of conducting such auctions going ahead as well
They said 'we will see'," the banker added.The central bank officials also reiterated that the swap auction was "purely to infuse liquidity"
and not aimed at the forex market, the bankers said.The RBI did not have an immediate response to an email seeking comments on the
meeting.There were some speculations that the RBI had timed the move to also absorb potential bunched-up forex inflows at March-end.Bankers
also suggested lowering the tenure of the swap to below three years as well as reducing the minimum bid size, which is $25 million
currently.While the central bank officials did not promise anything, they said they would like to assess response to the first auction
before making any changes, the bankers said.Some bankers also asked such announcements to be made much more in advance than it was done for
the current one, since they needed time to arrange for underlying dollar liabilities from the investors, either in the form of deposits or
bonds to offer to the central bank."They said this time they didn't have time since they had to complete this before the end of current
fiscal year (March)," said the second banker."They said this is an experiment, let's see how it goes."Get the latest election news, live
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