RBI inflows Rs 25,000 crore to boost system liquidity in banking system

The Reserve Bank of India (RBI) injected funds into the banking system as the weighted average call rate, a parameter for short-term borrowing costs, rises 23 basis points above the policy repo rate at 6.73% on Friday.

The RBI injected funds worth Rs 25,000 crore via a variable rate repo auction (VRR) to ensure that recent overseas outflows from local debt and equity do not drive up banks' cost of funds, analysts said.

This is the second such auction that the RBI has conducted after its change in stance to neutral from the withdrawal of accommodation.

"On Thursday, surplus liquidity - as measured by absorption of funds by the RBI - dropped to a one-month low of Rs 84,154.75 crore, central bank data showed." "In the auction on Friday, the RBI received bids worth Rs 35,420 crore from banks versus the notified amount of Rs 25,000 crore, reflecting the need for funds from lenders.

 

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