The Reserve Bank of India (RBI) on June 27 removed Rs 84,975 crore from the banking system through the seven-day variable rate reverse repo (VRRR) auction.
The central bank received bids worth Rs 84,975 crore, which it accepted in full at 5.49 percent cut-off rate, the central bank said in a release.
The move will reduce surplus liquidity in the banking system and could push up rise in overnight rates.
On June 26, the liquidity in the banking system was in surplus of around Rs 2.71 lakh crore, RBI’s data shows.
The banking system is expected to get flushed with liquidity after the start of cash reserve ratio (CRR) cut from September. This will provide durable liquidity support of Rs 2.5 lakh crore to the banking system during festive season.
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