Business · Economy · 1 hr ago
India’s banking liquidity surplus narrows to ₹541 crore
India’s banking liquidity surplus fell to ₹541 crore as of October 21, as banks held more cash to meet reserve requirements.
Banks had to meet a daily cash reserve requirement of 99%.
The tighter cash supply pushed the weighted average call rate to 5.65%, 15 basis points above the RBI’s repo rate.
Banks bid ₹1.62 lakh crore in an RBI operation offering ₹50,000 crore in short-term funds, showing strong demand for cash.
The surplus had peaked at ₹11 lakh crore in mid-September, after the RBI ended a programme encouraging foreign currency inflows.
The RBI plans another three-day liquidity operation on Friday to provide funds to the banking system.
India’s banking-system liquidity surplus narrowed to ₹541 crore as of October 21.
Banks parked additional funds to meet the daily cash reserve requirement of 99%.
The weighted average call rate was 5.65% on Thursday, 15 basis points above the repo rate.
The Reserve Bank of India’s ₹50,000 crore variable rate repo operation attracted bids of ₹1.62 lakh crore.
- Who
- Indian banks and the Reserve Bank of India.
- What
- The banking-system liquidity surplus narrowed to ₹541 crore.
- When
- As of October 21; the article reports the call rate for Thursday.
- Where
- India’s banking system.
- Why
- Banks parked additional funds to meet the daily cash reserve requirement of 99%, amid a cash crunch.
This story does not have two clearly opposing sides.
The banking system’s liquidity surplus reached a peak of ₹11 lakh crore after the RBI ended an incentives-laden forex-inflow program.
The liquidity surplus narrowed to ₹541 crore.
The weighted average call rate stood at 5.65%, 15 basis points above the repo rate.
The RBI planned to conduct another three-day variable rate repo operation.
- Liquidity surplus
- ₹541 crore as of October 21
- Cash reserve requirement
- 99%
- Weighted average call rate
- 5.65% on Thursday
- RBI variable rate repo operation
- ₹50,000 crore; bids of ₹1.62 lakh crore
- Previous liquidity peak
- ₹11 lakh crore in mid-September