Towards the notified quantity of ₹1 lakh crore, the central financial institution obtained bids value solely ₹57,450 crore, which was accepted by the RBI. The cut-off and weighted common price each got here in at 5.49%. The earlier week's seven-day VRRR was additionally unsubscribed.
Financial institution treasury officers stated that the RBI's intent behind conducting the three-day VRRR appears to be extra towards preserving in a single day charges throughout the liquidity adjustment facility (LAF) than draining out extra liquidity. VRRR doesn't completely take away liquidity, however will increase value of liquidity, thus pushing up in a single day charges.
At present, the banking system is in a liquidity surplus of ₹2.6 lakh crore, whereas the RBI's said goal is to take care of surplus round 1% of NDTL, i.e., roughly ₹2.5 lakh crore. A banking system surplus is essential for sooner transmission of coverage price motion. To date this yr, the benchmark repo charges have slid one share level.
“Of the excess, ₹1-1.1 lakh crore was obtainable for the VRRR public sale. Nevertheless, banks could also be reluctant to park the complete quantity with the RBI, as charges have already moved above the standing deposit facility (SDF) price. The seemingly intent of the VRRR is to raise in a single day charges, which had softened on Monday. If in a single day charges proceed to stay beneath the LAF hall, an announcement of an in a single day VRRR can't be dominated out,” stated V RC Reddy, head of treasury, Karur Vysya Financial institution.
