Record liquidity surplus prompts RBI to absorb Rs 6.02 lakh crore

Mumbai: The Reserve Bank of India (RBI) on Friday absorbed over Rs 6.02 lakh crore from the banking system through two variable rate reverse repo (VRRR) auctions as surplus liquidity remained at a record high.

The central bank received and accepted bids worth Rs 5,41,975 crore in a three-day VRRR auction against a notified amount of Rs 7 lakh crore. The auction was conducted at a cut-off rate of 5.24 per cent.

In another three-day VRRR auction, against a notified amount of Rs 1.5 lakh crore, banks parked Rs 60,419 crore with the RBI, also at 5.24 per cent. Together, the two operations absorbed Rs 6,02,394 crore of surplus liquidity.

The RBI has stepped up liquidity absorption operations after large inflows through the special FCNR(B) deposit scheme flooded the banking system with funds. Liquidity was estimated at a surplus of around Rs 10.32 lakh crore as of September 3, according to RBI data.

The RBI’s special forex measures mobilised $136.38 billion by August 31, including $127.23 billion through FCNR(B) deposits, $5.26 billion through overseas foreign currency borrowings (OFCBs) and $3.89 billion through external commercial borrowings (ECBs). The FCNR(B) window was closed a month early on August 31 because of the strong response, while the ECB/OFCB facility remains open until December 31. Inflows through these routes are expected to increase.

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The Hans India