Archive · 23 Jul 2025
RBI's Liquidity Injection Sees Strong Bank Response
The Reserve Bank of India (RBI) gave money to banks through a short-term loan program.
Banks needed this money because they were dealing with tax payments.
Banks asked for more money than the RBI offered, showing there was a high demand.
Interest rates went up slightly as a result.
The RBI is trying to keep the interest rates stable and within a certain range.
This helps the financial system run smoothly and prevents big changes in interest rates.
RBI conducted a two-day variable rate repo auction to inject short-term liquidity.
Banks bid ₹71,902 crore against a notified amount of ₹50,000 crore.
The cut-off rate was 5.53%, and the weighted average rate was 5.58%.
The weighted average call rate (WACR) rose to 5.73% and briefly hit 5.85%.
The RBI aims to keep overnight rates within the Liquidity Adjustment Facility (LAF) corridor.
- Who
- The Reserve Bank of India (RBI) and banks.
- What
- RBI conducted a variable rate repo auction to inject short-term liquidity into the market.
- When
- The auction took place on Wednesday.
- Where
- Not explicitly mentioned in the article.
- Why
- To address liquidity needs due to tax outflows and align the call rate with the repo rate.
- Auction Type
- Variable Rate Repo
- Auction Duration
- Two-day
- Notified Amount
- ₹50,000 crore
- Total Bids
- ₹71,902 crore
- Cut-off Rate
- 5.53%
- Weighted Average Rate
- 5.58%
- WACR at Close
- 5.73%