1 week ago
RBI's Overnight Auction Draws ₹3.53 Lakh Crore Bank Bids
The Reserve Bank of India wanted banks to temporarily deposit some extra money with it.
Banks showed limited interest in keeping their money with the RBI for 30 days.
They offered ₹2.59 lakh crore even though the RBI was ready to accept ₹7 lakh crore.
Banks were more willing to deposit money overnight, offering ₹3,53,390 crore against ₹5 lakh crore.
The RBI accepted all the overnight offers at an interest rate of 5.24%.
These auctions help the RBI reduce the amount of extra cash in the banking system.
Much of the extra money came after special measures brought foreign currency into India.
The RBI also began surveys about inflation, consumer confidence and rural households to help with future policy decisions.
Banks bid ₹2.59 lakh crore for the RBI’s 30-day VRRR auction against a notified ₹7 lakh crore.
The 30-day auction attracted bids covering about 37%, with accepted bids priced at 5.24%.
In a subsequent overnight auction, banks bid ₹3,53,390 crore against ₹5 lakh crore offered.
All overnight bids were accepted at a 5.24% cut-off and weighted-average rate.
Banking-system liquidity stood at a surplus of ₹11.16 lakh crore on 6 September, partly supported by foreign-currency inflows.
- Who
- The Reserve Bank of India and banks participating in its variable rate reverse repo auctions.
- What
- The RBI absorbed surplus bank funds through 30-day and overnight VRRR auctions, receiving stronger participation for the overnight operation.
- Where
- In India’s banking system; the household and consumer surveys cover 19 cities, while the rural survey covers rural and semi-urban areas across 31 states and Union Territories.
- When
- The auctions were held on 7 September; the RBI launched related surveys on 8 September, with its next policy announcement scheduled for 7 October.
- Why
- The RBI used the auctions to absorb excess liquidity from the banking system.
Longer-Term Parking
Overnight Parking
Bank participation
Longer-Term Parking
Banks showed limited interest in the 30-day VRRR auction, submitting bids for about 37% of the notified amount.
Overnight Parking
Banks were more comfortable with shorter-term parking, submitting bids covering more than 70% of the overnight amount.
Liquidity management
Longer-Term Parking
The weak 30-day response meant the RBI did not receive bids for the full ₹7 lakh crore it had offered to absorb.
Overnight Parking
The overnight auction received stronger participation, with all submitted bids accepted against the ₹5 lakh crore offer.
Key facts
- 30-day auction bids
- ₹2.59 lakh crore against ₹7 lakh crore notified
- 30-day auction coverage
- About 37%
- Overnight auction bids
- ₹3,53,390 crore against ₹5 lakh crore offered
- Auction rate
- The cut-off and weighted-average rates were 5.24% for both auctions
- System liquidity surplus
- ₹11.16 lakh crore on 6 September
- Foreign-currency inflows
- The RBI said special forex measures mobilised $136.38 billion by 31 August
- Upcoming policy announcement
- Scheduled for 7 October
Sources
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