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NEW DELHI: The RBI on Thursday infused over Rs 1. 1 lakh crore into the banking system, a sign of the tight liquidity that is needed to contain inflation. This is the highest single-day liquidity infusion in over four years, although in percentage terms this is insignificant, bond market players said.
Compared to the aggregate deposit of Rs 178. 6 lakh crore as on February 24, according to the latest RBI data, the net infusion of about Rs 1. 1 lakh crore was just 0. 6% of the deposit figure. At the height of the monetary-tightening spree, in October 2018, this percentage had risen above 1. 5% , money market figures show.
One of the reasons for the tight liquidity in the system is the reversal of the long-term repo operations (LTROs). In March-April 2020, just when lockdowns were disrupting the country, institutions had borrowed from the central bank through its specially created LTRO window, which were for about 1,100 days. Those borrowing are coming up for payments, creating some liquidity shortage in the banking system, a bond dealer said.
Compared to the aggregate deposit of Rs 178. 6 lakh crore as on February 24, according to the latest RBI data, the net infusion of about Rs 1. 1 lakh crore was just 0. 6% of the deposit figure. At the height of the monetary-tightening spree, in October 2018, this percentage had risen above 1. 5% , money market figures show.
One of the reasons for the tight liquidity in the system is the reversal of the long-term repo operations (LTROs). In March-April 2020, just when lockdowns were disrupting the country, institutions had borrowed from the central bank through its specially created LTRO window, which were for about 1,100 days. Those borrowing are coming up for payments, creating some liquidity shortage in the banking system, a bond dealer said.
