Mumbai

The Reserve Bank of India (RBI) on Tuesday injected Rs 1,41,171 crore transient liquidity into the banking system through a seven-day variable rate repo (VRR) auction.

The funds were infused at a cut-off and weighted average rate of 5.26 per cent, according to the RBI's release.

This was done after the liquidity in the banking system turned in to deficit of Rs 19,971.89 crore as on June 22, from a surplus of Rs 30,685.11 crore as on June 21.

Experts attributed the tightening of liquidity to the outflows on account of goods and services tax (GST) payments from the banking system.

The liquidity entering the deficit territory has put pressure on the overnight money market rates, with weighted average call money rate trading at 5.43 per cent, which is 0.18 per cent above the RBI's repo rate.

Similarly, the tri-party repo (treps) were trading 0.05-0.07 per cent over the repo rate.

In the last few days, the central bank has been infusing transient liquidity into the banking system as it has come under pressure since outflows of advance tax payments.

To ease liquidity pressures and keep overnight money market rates in check, the central bank has infused transient liquidity of about Rs 2.43 lakh crore through variable rate repo (VRR) auctions of different tenures over the past few days.

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Of the total infusion, the RBI injected Rs 36,300 crore on Monday via overnight VRR, Rs 16,750 crore on Friday through three-day VRR auction, Rs 72,300 crore on Wednesday through two VRR auctions, Rs 89,440 crore via a seven-day VRR auction on June 16, and Rs 28,220 crore through an overnight VRR auction on June 15, according to the RBI data.