Reserve Bank of India absorbs Rs 3.53 lakh crore in excess liquidity

The Reserve Bank of India (RBI) absorbed over Rs 3.53 lakh crore in excess liquidity from the banking system through an overnight Variable Rate Reverse Repo (VRRR) auction. While the notified amount for the auction was Rs 5 lakh crore, the bids received totaled Rs 3,53,390 crore, representing more than 70 per cent of the notified amount. The RBI accepted the full sum at a weighted average rate of 5.24 per cent.

The surge in liquidity follows massive foreign exchange inflows, totaling $73 billion in less than 11 weeks since the launch of a special dollar-rupee forex swap facility. This influx was largely driven by the FCNR(B) deposit scheme, which accounted for $65.40 billion. This mobilization is noted as the largest and fastest foreign-currency exercise in India's history, significantly outpacing the scale of the 2013 FCNR(B) swap scheme.