Systemic banking liquidity surplus rose to ₹91,225 crore on July 4, reaching its highest level in two and a half months, according to Infomerics Ratings.
Entertainment Sharma name of cast, chief economist, infomerics Ratings attributed the surplus to government spending and maturity of government securities of about ₹60,000 crore.
He said the RBI will continue to use various tools to control systemic banking liquidity.
vrrr auction
Since the beginning of July, the 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 “accommodative” monetary policy stance.
In the ₹1 lakh crore 3-day VRRR auction on Friday, banks submitted offers to park funds totaling ₹61,731 crore. RBI accepted the funds at a weighted average rate (WAR) of 6.49 percent.
In his monetary policy statement last month, RBI Governor Shaktikanta Das had said that looking ahead, the RBI will remain agile and flexible in its liquidity management through core and fine-tuning operations in both repo and reverse repo.
“We will deploy an appropriate mix of instruments to control both frictional and durable liquidity to ensure that money market interest rates evolve in an orderly manner that maintains financial stability.
“As demonstrated by our actions in the recent period, the Reserve Bank is committed to maintaining stability and order in all areas of the financial markets and the institutions regulated by it,” Das said.
