 "RBI")
The Reserve Bank of India (RBI) received bids worth Rs 2.08 trillion at the 13-day variable rate repo auction (VRR) on Friday against the notified amount of Rs 1 trillion.
Liquidity deficit in the banking system stood at Rs 2.37 trillion as on February 22, according to the latest RBI data. The RBI will conduct a 3-day VRR auction on February 26 to infuse Rs 1.5 trillion into the banking system.
Despite a slew of VRR auctions being conducted by the RBI since February 8, the persistent liquidity deficit in the banking system has been largely around Rs 2 trillion.
In February, when the liquidity deficit eased to Rs 1 trillion, overnight money market rates had dipped below the repo rate. In response, the central bank initiated a series of variable rate reverse repo auctions to realign the rates with the repo rate.
The weighted average call rate settled at 6.68 per cent on Friday against 6.55 per cent on Thursday.
RBI Governor Shaktikanta Das had elaborated on liquidity conditions in his monetary policy statement, ascribing them to external factors and expecting them to rectify in the foreseeable future, bolstered by market interventions by the central bank.
The RBI, he said, is agile and adaptable in its liquidity management, employing both repo and reverse repo operations. He said the RBI would utilise a judicious mix of instruments to regulate both short-term and long-term liquidity, ensuring that money market interest rates evolved systematically while upholding financial stability.
