The move comes after the central bank’s second attempt to mop up liquidity via longer tenure variable rate reverse repo (VRRR) auction met with a muted response.
The net liquidity in the banking system was in a surplus of ₹10.43 trillion on Thursday, latest data by the RBI showed, the core liquidity is estimated around ₹13 trillion to ₹14 trillion. The OMO sales is aimed to suck out durable liquidity while VRRR auctions are for transient money.
During an interview to private television channel CNBC-TV18, Malhotra while answering a question on tools that can be deployed to suck out the liquidity, Malhotra said, “We have enough tools,” while mentioning OMOs and swaps, and that VRRR may not be of much help.
When specifically asked on hiking banks’ cash reserve ratio requirement, Malhotra though said ‘nothing is off the table’ but added RBI is conscious of the fact CRR was exempted from FCNR (B) deposits mobilised though the concessional swap window. The current liquidity surplus in the system is mainly due to the $127 billion FCNR(B) deposit mobilisation.
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