Liquidity

Why the central bank relies on a mix of short- and long-term tools to keep money in check

The increase in currency in circulation and the rise in reserve requirements as the deposit base expands could absorb a part of the surplus over the coming months

The Reserve Bank of India (RBI) on Monday accepted bids worth Rs 25,000 crore in the second tranche of its open market operation (OMO) sale of government securities, as it stepped up efforts to absorb surplus liquidity from the banking system. The RBI accepted Rs 11,512 crore of the 6.10 per cent GS 2031, Rs 8,758 crore of the 7.95 per cent GS 2032, Rs 2,300 crore of the 6.75 per cent GS 2029, Rs 2,250 crore of the 7.17 per cent GS 2030, and Rs 180 crore of the 7.17 per cent GS 2028, according to the release. However, the central bank did not accept any bids for the 8.28 per cent GS 2027, the release said. The OMO sale comes amid a large liquidity surplus in the banking system. Liquidity surplus was estimated around Rs 6.05 lakh crore as of September 20, according to the RBI data. Under an OMO sale, banks and other investors pay the RBI for the government securities, thereby draining rupee liquidity from the banking system. The central bank had announced OMO sales totalling Rs 1 la

With global central banks raising rates, RBI may need to drain excess banking liquidity and align overnight rates with the repo rate before embarking on a fresh tightening cycle

The central bank sold Rs 50,000 crore of government securities in the first of three OMO tranches planned for September to absorb surplus liquidity from the banking system.

The Reserve Bank of India (RBI) on Thursday absorbed Rs 2.40 lakh crore through variable rate reverse repo (VRRR) auctions from the banking sector amid huge surplus liquidity. The central bank received bids worth Rs 2,39,959 crore, which it accepted fully, at a cut-off and weighted average rate of 5.24 per cent. The RBI has been, since last month, doing various VRRR auctions in order to absorb excess surplus liquidity from the banking system and align the overnight money market rates to the repo rate. Currently, liquidity in the banking system is estimated to be in surplus of around Rs 7.38 lakh crore as on September 16. Apart from VRRR, last week, the central bank announced Open Market Operation (OMO) sales of government securities for a notified amount of Rs 1 lakh crore in three tranches. The first tranche of Rs 50,000 crore will be held on September 17, and Rs 25,000 crore each on September 21 and September 28, RBI said. The banking system has a huge surplus of liquidity due

The Reserve Bank of India (RBI) on Wednesday absorbed Rs 2.90 lakh crore through two variable rate reverse repo (VRRR) auctions from the banking system amid a huge surplus. In the first auction, the central bank received bids worth Rs 3,17,088 crore for a notified amount of Rs 2.50 lakh crore. However, it accepted only Rs 2,50,025 crore at a cut-off and weighted average rate of 5.24 per cent. The central bank received a tepid response in the second auction with bids worth Rs 40,302 crore for a notified amount of Rs 1 lakh crore, which it accepted fully. The RBI, since last month, has been conducting various VRRR auctions in order to absorb surplus liquidity from the banking system and align the overnight money market rates to the repo rate. Currently, liquidity in the banking system is estimated to be in surplus of around Rs 9.85 lakh crore as on September 15. Apart from VRRR, last week, the central bank announced Open Market Operation (OMO) sales of government securities for a ..

Economists expect the central bank to use OMO sales, sell-buy swaps and other liquidity-management tools to gradually absorb the durable surplus

Says AI can help the regulator shift to 'proactive' monitoring from 'periodic' monitoring; Sebi is also set to propose changes to the closing auction framework

Central bank will conduct a 26-day VRRR auction on Friday to absorb surplus banking-system liquidity; funds placed in the auction will be reversed on October 7

India must now choose among currency appreciation, inflation, bank losses, indirect public exposure and an expensive sterilisation programme

Bids worth ₹2.59 trn received against ₹7 trn notified

The Reserve Bank ​of India received offers worth ₹3.53 trillion at an overnight auction, right ‌after banks parked ₹2.59 trillion through a 30-day auction

Fx reserves swell to nearly $741 bn, driven by rush of swap dollars

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 the 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 helped the RBI absorb Rs 6,02,394 crore of surplus liquidity. The RBI has stepped up liquidity absorption operations as the banking system has been flooded with funds following large inflows through the special FCNR(B) deposit scheme. Currently, liquidity in the banking system is estimated to be in surplus of around Rs 10.32 lakh crore as on September 3, according to the RBI's data. The RBI's special fore

Muted response to fresh ₹10 trn VRRR auctions; rupee appreciates to two-month high

Banks parked Rs 3.84 trillion against the Rs 10 trillion notified in Monday's VRRR auctions, while the benchmark 10-year government bond yield rose to 6.95 per cent

India's banking-system liquidity surplus has averaged more than 3.4 trillion rupees ($36 billion) so far in August and is expected to expand further

The RBI may use an incremental CRR to absorb rising surplus liquidity before raising the repo rate, as core liquidity could approach ₹10 trillion in coming weeks

The central bank absorbed ₹1.41 trillion through seven-day and overnight VRRR auctions at 5.24 per cent, and announced a ₹1.75 trillion two-day auction for Tuesday