'RBI action to inject liquidity in the system'

New Delhi, Nov 30 (PTI) The Finance Ministry today said RBI action to allow banks to borrow more funds from it would inject liquidity into the system that is facing a cash crunch due to a slew of IPOs and busy credit season.

"They have taken some action yesterday and that would put money in the system and (RBI) would keep doing it as and when necessary," Finance Secretary Ashok Chawla said.

He was speaking to reporters on the sidelines of a function organised by the Finance Ministry and think tank NIPFP.

RBI yesterday allowed banks to borrow funds from it, even if they miss mandatory requirement to keep 25 per cent of their deposits in government bonds by 2 per cent.

For this purpose, RBI will continue to conduct special Liquidity Adjustment Facility.

RBI lends and borrows money from banks against government securities under this facility.