Mumbai, Jan 30 (KNN) – The Reserve Bank of India (RBI) is all set to pump ₹25,000 crore into the banking system with an overnight variable rate repo auction (VRR) on Tuesday, aiming to ease the liquidity crunch.
After Monday’s VRR auction saw bids skyrocket to ₹73,290 crore, way above the ₹25,000 crore target, it’s clear that banks are desperate for cash. The banking system’s liquidity deficit hit a whopping ₹2.58 trillion on Sunday.
Previous VRR auctions also showed massive demand, with banks bidding 2.5 to 3.2 times the available amounts. The RBI had to bring back the VRR auction in December after a six-month pause to tackle the persistent liquidity issues.
With this move, the RBI hopes to smooth out the financial system’s rough edges. All eyes are on the auction results to see if this cash injection will finally ease the pressure.
