No takers for two-day LAF auction of RBI

No takers for two-day LAF auction of RBI

Mumbai: Signalling the improving liquidity conditions in the system, the daily liquidity adjustment facility auction conducted by the Reserve Bank on 20 October had no takers despite the fact that it was for two days in view of the strike called by the RBI employees tomorrow.

The central bank received no bids under the daily repo auctions.

“This might be signal of improving liquidity in the banking system, mainly owing to the infusion of around 1.2 trillion cash into the system by the apex bank," a treasury official with a private sector bank told PTI here.

Besides slashing its cash reserve ratio by 2.5% from 11 October and opening a special window for mutual funds, RBI cut its short-term lending rate by 1% to 8%.

Through its recent measures, the apex bank has infused nearly 1.2 trillion into the system, while another 5,000 crore will be delivered to the banks to compensate the farm-loan waiver.

At present, the CRR and repo rates stands at 6.5% and 8% respectively.

Till Friday, banks have bought Rs7,005 crore under the special repo window, which has been kept open everyday by the RBI until banks cumulatively avail Rs20,000 crore.

The one-day ‘mass casual leave’ called by the Reserve Bank employees on Tuesday is likely to affect the operations of the central bank.