Liquidity tightness in the banking system forced banks to place bids aggregating over ₹3-lakh crore crore at the 7-day variable rate repo (VRR) auction conducted by the RBI on Friday against the notified amount of ₹1.25-lakh crore.
The RBI conducted a VRR auction in view of likely outflows from the banking system on account of advance tax and GST payments.
In his latest monetary policy statement, RBI Governor Shaktikanta Das observed that system liquidity, as measured by the net position under the liquidity adjustment facility (LAF), turned into deficit mode for the first time in September 2023 after a gap of nearly four and a half years since May 2019.
Earlier this month, banks’ placed bids aggregating ₹2,73,354 crore at the 7-day variable rate repo (VRR) auction conducted by RBI on December 15 against the notified amount of ₹1-lakh crore.