The Reserve Bank of India is unlikely to re-introduce the coverage of lending cash day by day to banks at a hard and fast charge, regardless of elevated clamour for it from market members, three sources stated on Thursday (July 31, 2025).
The coverage, referred to as mounted charge liquidity operations, will assist banks handle their wants higher, a number of bankers proposed to the RBI in conferences held over the previous couple of months. Banks had requested for the quantum of infusion to be mounted on a proportion of their deposit base.
“The RBI is clearly not in favour of hand-holding banks and wants to keep any liquidity operation on a variable rate,” one supply stated.
The sources requested anonymity as they don’t seem to be authorised to converse to media. The RBI didn’t reply to a Reuters electronic mail searching for remark.
In variable repo or reverse repo, via which RBI injects or absorbs money, banks have to bear a bidding course of based mostly on their funding wants.
Last week, in a single day inter-bank name cash charges jumped above marginal standing facility charge, which is the coverage hall ceiling, after banks parked funds with RBI beneath reverse repos. They then confronted a scarcity after tax outflows.
“On days like that, it helps if there is a repo window available,” the second supply stated.
Lenders additionally requested for leisure of day by day upkeep of the money reserve ratio, which is the share of deposits that they want to park with the RBI.
The RBI can also be reviewing the liquidity administration framework. The revised framework may very well be launched alongside the financial coverage determination on August 6, some market members stated.
The sources stated that the RBI might shift to a seven-day operation as the principle liquidity instrument, as an alternative of the present 14-day auctions adopted in 2020. The financial institution has skipped conducting the 14-day operation because the final six fortnights.
