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Bloomberg Quint

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Image Credit: Bloomberg Quint

RBI Plans To Drain $11.7 Billion From Banking System

  • The Reserve Bank of India plans to drain $11.7 billion from the banking system through a seven-day variable reverse repurchase auction on July 4.
  • This move is aimed at withdrawing excess liquidity and aligning overnight borrowing costs with the benchmark repurchase rate of 5.5%.
  • The central bank's policy framework involves injecting or absorbing liquidity as needed to maintain borrowing costs in alignment with the policy rate.
  • The recent measure to drain excess cash follows concerns over prolonged low overnight rates relative to the policy rate and the potential impact on inflationary pressures.

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