Banks placed bids aggregating over ₹1 lakh crore to draw funds from the Reserve Bank of India (RBI) at the one-day variable repo rate auction on Monday against the notified amount of ₹50,000 crore as the system’s liquidity surplus has come down sharply due to tax out flows.
The banking system’s liquidity has swung from a surplus of ₹2.55 lakh crore on September 5 to a deficit of about ₹5,000 crore on September 18.
Mild surplus
“The deficit was due to outflows on account of monthly GST and quarterly advance tax payments. Now, the banking system has come back to a mild surplus of about ₹25,000 crore.”
“RBI is conducting liquidity management operations in such a way that the weighted average call rate stays in the 6.40 per cent to 6.60 per cent band,” said V Rama Chandra Reddy, Head-Treasury, Karur Vysya Bank.
At the one-day VRR auction, the RBI received bids from banks to draw liquidity aggregating ₹1,02,655 crore against the notified amount of ₹50,000 crore. It accepted bids aggregating ₹50,007 crore at a weighted average rate of 6.66 per cent.
Three VRR auctions in a month
In the current month so far, RBI has conducted three VRR auctions: a 3-day for ₹1 lakh crore on September 17, a 14-day for₹25,000 crore on September 20 and a one-day for ₹50,000 crore.
At the last bi-monthly monetary policy review on August 8, RBI Governor Shaktikanta Das said going forward, the Reserve Bank will continue to be nimble and flexible in its liquidity management operations keeping in view the evolving liquidity conditions to ensure that money market interest rates evolve in an orderly manner.