Business · Economy · 6 hrs ago
RBI injects Rs 1 lakh crore as overnight rates rise
India's central bank offered banks Rs 1 lakh crore through a short-term lending auction on Monday.
The Reserve Bank of India acted after the overnight call rate reached 5.67%, above its 5.50% policy rate.
The rate rise came after tighter daily cash reserve requirements took effect on October 16, while banks also faced monthly tax payments.
The RBI uses short-term lending and borrowing to keep overnight rates near its policy rate, which sits between the corridor's upper and lower limits.
The move is meant to ease pressure on banks' short-term funding as the festive season gathers pace.
Banks bid Rs 1.50 lakh crore at Monday's auction, even though the banking system overall had a liquidity surplus of Rs 1.99 lakh crore as of October 16.
The RBI plans another Rs 50,000 crore auction on Wednesday.
The Reserve Bank of India announced a Rs 1-lakh-crore variable rate repo auction after overnight call rates rose above the policy repo rate.
The weighted average call rate was 5.67% on Monday, 17 basis points above the repo rate of 5.50%.
The RBI also scheduled a Rs 50,000-crore variable rate repo auction for Wednesday.
The central bank said it was conducting its first liquidity infusion operation in three months.
Traders said the infusion would help banks manage monthly tax outflows after a tighter daily cash reserve requirement took effect.
- Who
- The Reserve Bank of India. The auction drew bids from banks.
- What
- The RBI announced a Rs 1-lakh-crore variable rate repo auction to inject liquidity.
- When
- Monday, October 19, 2026. Another auction was scheduled for Wednesday.
- Where
- India.
- Why
- Overnight call rates rose above the policy repo rate. The liquidity infusion was also expected to help banks manage monthly tax outflows.
This story does not have two clearly opposing sides.
The tighter daily cash reserve requirement took effect, and banking system liquidity stood at a surplus of Rs 1.99 lakh crore.
The weighted average call rate reached the marginal standing facility for the first time that year.
The RBI announced a Rs 1-lakh-crore variable rate repo auction as the weighted average call rate stood at 5.67%.
The RBI was scheduled to conduct another variable rate repo auction for Rs 50,000 crore.
- First auction since
- Late July
- Monday auction
- Rs 1 lakh crore
- Wednesday auction
- Rs 50,000 crore
- Weighted average call rate
- 5.67%, 17 basis points above the 5.50% repo rate
- Bids received
- Rs 1.50 lakh crore
What people are saying
It doesn't matter what the stance of the monetary policy is, but the job of liquidity management is to keep the overnight rate at repo rate. Currently, the WACR is near the MSF (marginal standing facility).