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RBI Injects ₹40,000 Crore Through Dual Auctions

17 Jan 2025 , 10:42 AM

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.

For feedback and suggestions, write to us at editorial@iifl.com

Related Tags

  • Banking
  • liquidity
  • RBI
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