Finance Minister Arun Jaitley on Friday met with leaders of the largest public sector banks to review the cash flow in the system, as some sectors feared a cash shortage, sources said.
Banks said they had enough cash to cope with the lack of liquidity of non-bank financial companies, they added.
The Secretary of the Financial Services Department and the Secretary of the Department of Economic Affairs also attended the meeting.
Leaders of six major public sector banks have assured the government of sufficient liquidity in the system, although sectoral concerns prevail, the sources said.
Banks at the meeting included the State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank and Bank of India.
Sources said the National Housing Bank (NHB), the housing finance regulator, had planned an expanded refinancing to address the housing finance sector's liquidity problems.
Earlier this month, NHB raised the refinancing limit to 30,000 crores for housing finance companies in 2018-2019. He had initially set the refinancing target at Rs 24,000 crore.
The shares of most housing finance companies, including DHFL, have been hit in recent weeks due to liquidity problems caused by the failure of IL & FS.
Earlier Friday, Financial Services Secretary Rajiv Kumar said the government will soon announce measures to reduce liquidity problems and deterioration in the quality of financial institutions' assets.
At the same time, the Reserve Bank announced on Friday that it would inject 40,000,000,000 RAR into the system in November, through the purchase of government securities, in order to meet the demand for funds for the holiday season.
For the month of October, the central bank has already injected 36,000 crores of rupees into the system through open market operations (OMO).
"Based on an assessment of future sustainable cash requirements, RBI decided to proceed with the purchase of public securities in OMO for a total amount of 400 billion rupees in November 2018", the central bank announced in a statement.
The Reserve Bank of India (RBI) had previously indicated that system liquidity would become negative in the second half of 2018-2019 and that changing liquidity conditions would determine the choice of transitional and sustainable management instruments. liquidity.