RBI ought to undertake modern mechanisms to handle system liquidity: SBI Analysis

RBI ought to undertake extra modern mechanisms to handle system liquidity as a result of the present liquidity pattern exhibits a median deficit of ₹0.6 lakh crore in FY25, in keeping with a brand new analysis report from the financial division of the State Financial institution of India.

RBI has been managing liquidity via principal and fine-tuning operations Common provide of liquidity by the use of variable fee repo auctions held in FY25 is ₹1.70 lakh crore, and common absorption via variable fee reverse repo public sale quantities to ₹0.32 lakh crore. Sturdy/core liquidity surplus has come right down to ₹1.50 lakh crore as on Could 31.

Amidst the current build-up of presidency surplus money balances and the following liquidity deficit, RBI introduced a buyback of Authorities securities to the tune of ₹2.0 lakh crore in Could’24

Nonetheless, market contributors have proven little curiosity within the buybacks, with provided quantity of ₹1.24 lakh crore and accepted bids amounting to ₹22,960 crore (11.5% of the notified quantity)

RBI has additionally lowered the public sale quantity of the Authorities’s T-bills to a complete of ₹72,000 crore on a weekly foundation between Could 22 and June 26, as in opposition to ₹1.32 lakh crore introduced earlier. This has launched extra liquidity for banks .

“Liquidity, nevertheless, nonetheless stays in deficit and Authorities’s surplus money balances will proceed to stay the elephant within the room. RBI ought to undertake extra modern mechanisms to handle system liquidity,” the report mentioned.