More VRRRs likely as banking system liquidity surplus hits ₹3.31 trn

Despite RBI's VRRR auction, liquidity surplus rose to its highest in weeks, keeping overnight rates near the SDF rate and prompting expectations of further auctions

Net liquidity in the banking system stood at a surplus of ₹3.31 trillion on July 1, the highest since June 13, according to the latest Reserve Bank of India (RBI) data. This is despite the RBI’s recent Variable Rate Reverse Repo (VRRR) auction.

 

The surplus liquidity has kept the overnight weighted average call rate near the Standing Deposit Facility (SDF) rate of 5.25 per cent and below the repo rate of 5.50 per cent. On Wednesday, the weighted average call rate eased further to 5.27 per cent from 5.31 per cent the previous day.

 

Market participants expect the central bank