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Informist, Thursday, Jun. 12, 2025

--RBI to skip 14-day liquidity ops Fri on review of liquidity conditions

MUMBAI – The Reserve Bank of India Thursday said in a release that it will not conduct the 14-day main operation for the upcoming fortnight on a review of evolving liquidity conditions. The central bank has conducted the fortnightly operation only once since March.

At the last 14-day auction on May 2, banks and primary dealerships borrowed only INR 1.49 billion from the RBI against the notified amount of INR 250 billion. The RBI's decision to skip the operation comes at a time when surplus liquidity in the banking system has averaged around INR 2.5 trillion in June, but is set to reduce sharply in the coming fortnight due to outflows for advance tax and goods and services tax payments. This may push the cash surpluses to near neutral for the first time since late April.

The central bank's next step on liquidity is being closely watched after the RBI cancelled the daily variable rate repo auctions it had been holding for nearly four months earlier this week. RBI Governor Sanjay Malhotra had Friday said the central bank's actions over the next few days would clarify the central bank's intent on where it wants to maintain the call rate. There is also speculation the central bank may re-introduce variable rate reverse repo auctions, after a gap over over six months.  End

Reported by Aaryan Khanna

Edited by Tanima Banerjee

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