With an aim to address additional demand for liquidity and to provide flexibility to banks in its liquidity management towards March-end, India’s central banking institution, the Reserve Bank of India (RBI) has said that it will infuse adequate additional liquidity of Rs 1 lakh crore in the banking system during March 2018, through longer term variable rate repo operations.
The apex banking institution will go for a combination of appropriate instruments for adequate additional liquidity infusion, while continuing with its normal Liquidity Adjustment Facility (LAF) operations. The RBI has decided to conduct additional variable rate repo operations for longer tenors after reviewing the current and evolving liquidity conditions in the banking system.
The RBI will conduct 4 variable rate term repo auctions for Rs 25,000 crore each on every Tuesday of March 2018. The tenors of additional variable rate repo operations will be in the range of 24-31 days. These auctions will be conducted in addition to the regular 14 day variable rate term repo auctions.