On Thursday, a day after the banking system liquidity shortfall crossed the ₹2 lakh crore mark, the Reserve Bank of India (RBI) made two distinct injections of slightly more than ₹40,000 crore into the banking system.
The RBI injected ₹9,892 crore through the government securities buyback window and ₹30,760 crore through bids at the overnight variable rate repo (VRR) auction. In the repurchase operation, it only took 33% of the notified amount, rejecting bids at higher rates, whereas in the VRR case, it accepted 61%.
The next daily VRR auction for ₹50,000 crore was also announced by the RBI on Friday. On Monday, this transaction will be reversed.
As of Wednesday, the banking system’s liquidity was in shortfall by ₹2.2 lakh crore, compared to an average deficit of ₹1.5 lakh crore in January, according to RBI statistics.
Bids of ₹30,760 crore were placed in the inaugural daily overnight VRR auction for ₹50,000 crore. According to data, 6.51% of bids were accepted.
In addition, the RBI held a 14-day VRR auction on January 10 and a five-day VRR sale on January 15. According to analysts, this is the cause of the weak demand during this period, suggesting that certain banks had adequate liquidity.
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