An interesting observation in this MPC meeting is that while 5 MPC members voted for staying the course, 1 MPC member, Professor Jayanth R. Varma, actually voted to reduce the policy repo rate by 25 bps.
Banks submitted bids amounting to Rs 4.75 trillion, around 2.5 times of the notified amount of Rs 1.75 trillion, at the Variable Rate Reverse Repo (VRR) auction conducted by the Reserve Bank of India (RBI) on December 22, a day after the liquidity deficit in the banking system widened to Rs 2.5 trillion.
In the most recent VRR auction held by the RBI on December 15, bids totaling 2.7 times the notified amount were received.
Banks secured Rs 1 trillion at a weighted average rate of 6.63 per cent.
Reserve Bank may use OMO sale of government securities to manage liquidity: Das devdiscourse.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from devdiscourse.com Daily Mail and Mail on Sunday newspapers.
While the RBI’s default models do give the market a sense of safety as things stand today, experience tells us that banking crises generally follow the domino theory and spread like wildfire