RBI Absorbs Rs 2.23 Lakh Cr From Banking System Through VRRR Auction

New Delhi, Sep 19 (KNN) The Reserve Bank of India (RBI) absorbed Rs 2.23 lakh crore from the banking system on Friday through a variable rate reverse repo (VRRR) auction as surplus liquidity remained elevated.

The central bank received and fully accepted bids worth Rs 2,22,629 crore against the notified amount of Rs 2.25 lakh crore. The funds were accepted at a weighted average rate of 5.24 per cent, the RBI said.

Banking Liquidity Surplus At Rs 6.94 Lakh Crore

The RBI has been conducting VRRR auctions since last month to absorb excess liquidity and keep overnight money market rates aligned with the repo rate, reported PTI.

As of September 17, liquidity in the banking system was estimated at around Rs 6.94 lakh crore in surplus, according to RBI data.

OMO Sales Add To Liquidity Management

As part of its liquidity management operations, the RBI on Thursday sold government securities worth Rs 50,000 crore through open market operations (OMO).

Two further tranches of government securities worth Rs 25,000 crore each are scheduled for September 21 and September 28.

The recent liquidity surplus has been attributed partly to strong mobilisation of foreign currency non-resident (bank) or FCNR(B) deposits, with subsequent swaps with the RBI releasing rupee liquidity into the banking system.

Month-end government spending, including salary and pension payments, has also contributed to the surplus liquidity.

(KNN Bureau)