The sources said that the RBI can move to a seven-day operation as the most important liquidity instrument, instead of the current 14-day auctions adopted in 2020 Photocredit: Danish siddiqui
It is unlikely that the reserve Bank of India (RBI) the policy to borrow money to banks daily at a fixed rate, despite increased call for the market participants, said three sources on Thursday. The policy, called Liquuidity Operations Fixed Rate, will help banks to better manage their needs, various bankers who have been presented to the RBI in meetings in recent months. Banks had asked for the amount of infusion to be set at a percentage of their deposit base. “The RBI is clearly not in favor of handbanks and wants to keep every liquidity process with a variable rate,” said a source.
The sources asked for anonymity because they are not authorized to speak with media. The RBI did not respond to one Reuters E -Mail search for comment.
In variable repo or reverse repo, which injects or absorbs RBI in cash, banks must undergo a bidding process based on their financing needs.
Last week the internal call money prizes over the night above the marginal standing facility percentage, the ceiling of the policy corridor, after banks have parked money with RBI under reverse repos. They were then confronted with a shortage after tax outflows.
“On such days it helps if a repo window is available,” said the second source.
Lenders also asked for relaxation of the daily maintenance of the cash reserve ratio, the percentage of deposits that they need to park with the RBI.
The RBI is also investigating the framework of liquidity management. The revised framework could be released on 6 August in addition to the monetary policy decision, some market participants said.
The sources said that the RBI can move to a seven-day operation as the most important liquidity instrument, instead of the current 14-day auctions adopted in 2020. Since the last six fourteen days, the bank has skipped the 14-day operation.
Published on July 31, 2025
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