RBI unlikely to re-introduce fixed-rate liquidity operations

The Reserve Bank of India is unlikely to re-introduce the coverage of lending cash every day to banks at a set fee, regardless of elevated clamour for it from market members, three sources stated on Thursday (July 31, 2025).

The coverage, known as mounted fee 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 share 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 aren’t authorised to talk to media. The RBI didn’t reply to a Reuters e-mail in search of remark.

In variable repo or reverse repo, by means of which RBI injects or absorbs money, banks must 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 fee, 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 rest of every day upkeep of the money reserve ratio, which is the share of deposits that they should park with the RBI.

The RBI can also be reviewing the liquidity administration framework. The revised framework could possibly be launched alongside the financial coverage resolution on August 6, some market members stated.

The sources stated that the RBI could shift to a seven-day operation as the principle liquidity software, as a substitute of the present 14-day auctions adopted in 2020. The financial institution has skipped conducting the 14-day operation because the final six fortnights.