Banking liquidity surplus shrinks to Rs 541 crore as cash crunch increases

What happened: The RBI's variable rate repo operations to infuse ₹50,000 crore liquidity drew bids of ₹1.62 lakh crore amid a cash crunch, and banking liquidity surplus shrank to ₹541 crore. Key numbers: ₹50,000 crore offered under VRRR; ₹1.62 lakh crore in bids; surplus at ₹541 crore versus a peak of ₹11 lakh crore in mid-September; another 3-day VRR on Friday. Why it matters: The sharp drop in surplus from the mid-September peak follows the RBI ending an incentives-laden forex-inflow program, and heavy bidding signals tight cash conditions in the system.

The RBI's variable rate repo operations to infuse ₹50,000 crore liquidity drew bids of ₹1.62 lakh crore amid a cash crunch, and banking liquidity surplus shrank to ₹541 crore.

The sharp drop in surplus from the mid-September peak follows the RBI ending an incentives-laden forex-inflow program, and heavy bidding signals tight cash conditions in the system.