The Reserve Bank of India (RBI) on July 4 removed Rs 1,00,010 crore from the banking system through the seven-day variable rate reverse repo (VRRR) auction.
The central bank received bids worth Rs 1,70,880 crore, against this, Rs 1,00,010 crore was accepted at 5.47 percent cut-off rate, RBI said in a release.
The move will reduce surplus liquidity in the banking system and could push up rise in overnight rates.
Currently, the liquidity in the banking system is in surplus of around Rs 4.04 lakh crore as on July 3, as per RBI’s data.
Prior to this, last week, the RBI removed Rs 84,975 crore liquidity from banking system via VRRR auction.
Despite this the liquidity remained in huge surplus due to government’s month-end inflows on account of salaries and pensions. Additionally, there were some redemption of bonds and coupon payments, which help liquidity to improve.
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