In a recent review of the countercyclical capital buffer (CCyB) framework, the Reserve Bank of India (RBI) has announced that it is not necessary to activate CCyB at this point in time.

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In a statement, the RBI said, "Based on the review and empirical analysis of the CCyB indicators, it has been decided that it is not necessary to activate CCyB at this point in time."

The framework, which was put in place in 2015, is designed to be activated as and when circumstances warrant, with the decision normally being pre-announced.

The CCyB framework uses the credit-to-GDP gap as its main indicator, along with supplementary indicators, to determine whether or not to activate the buffer. Based on a review and empirical analysis of these indicators, the RBI has determined that activation is not needed at this time.

The decision comes as a relief to banks, which would have had to maintain additional capital buffers had the CCyB been activated.

In related news, the RBI has also announced that it will conduct a 13-day variable rate reverse repo auction of Rs 50,000 crore under the Liquidity Adjustment Facility (LAF) on April 21, 2023.

The LAF is a monetary policy tool used by the RBI to manage short-term liquidity in the financial system.

Also read: Consumer confidence on recovery track from historic low in mid -2021: RBI report