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India’s banking system liquidity deficit widened to the best degree in almost eight years this week. Wednesday’s repo, via which the RBI lends funds to banks, noticed bids price 1.58 trillion rupees.
“Scarcity of funds will solely get exaggerated within the final quarter (of the fiscal yr), which ideally additionally sees the strongest credit score progress,” a senior treasury official at a non-public financial institution stated. “We count on frequency of such repos to extend.”
Banking system liquidity sometimes tightens in January-March as individuals withdraw money from banks.
“In case, steadiness of funds surplus is small in This fall, then RBI might want to take additional measures to deal with tightness in liquidity situations,” IDFC First Financial institution’s economist Gaura Sen Gupta stated. She expects longer tenor repo auctions.
A Prasanna, head of analysis at ICICI Securities Major Dealership, additionally believes the RBI should rely extra on repos within the subsequent quarter. It could conduct shorter-term repos and hold rolling them over, he added.Regardless of the liquidity infusion, in a single day charges are above the marginal standing facility charge of 6.75%, which is the higher finish of the financial coverage charge hall.The weighted common interbank name cash charge was at 6.84% on Wednesday, whereas the weighted common triparty repo charge was at 6.78%.
