Systemic banking liquidity surplus at ₹91,225 crore as on July 4 rose to its highest in two-and-a-half months, according to Infomerics Ratings.
Manoranjan Sharma, Chief Economist, Infomerics Ratings, attributed this surplus to government spending and maturity of government security of about ₹60,000 crore.
He observed that RBI will continue to use various instruments to moderate systemic banking liquidity.
VRRR auctions
Since the beginning of July, RBI has conducted variable rate reverse repo (VRRR) auctions every day to absorb surplus liquidity from the banking system.
These auctions are in keeping with the central bank’s “withdrawal of accommodation” monetary policy stance.
At the 3-day VRRR auction of ₹1-lakh crore on Friday, Banks’ submitted offers to park funds aggregating ₹61,731 crore. The RBI accepted the funds at a weighted average rate (WAR) of 6.49 per cent.
In his monetary policy statement last month, RBI Governor Shaktikanta Das said looking ahead, the RBI will continue to be nimble and flexible in its liquidity management through main and fine-tuning operations in both repo and reverse repo.
“We will deploy an appropriate mix of instruments to modulate both frictional and durable liquidity so as to ensure that money market interest rates evolve in an orderly manner which preserves financial stability.
“As our actions over the recent period have shown, the Reserve Bank stands committed to maintain stability and orderliness in all segments of financial markets and institutions regulated by it,” Das said.