MUMBAI:  The Reserve Bank of India is in discussion with the government to auction the surplus cash balance to commercial banks, RBI Deputy Governor H.R. Khan said.  “We have been in discussion with government whether they can release the (cash balance) figure… as of now, they have some reservation about releasing figures… We are in discussion with the government about auctioning their balances,” Khan said in a post-policy conference call with analysts. The government keeps its cash balances with the RBI. Such amounts are not revealed as they are treated as classified information.  Currently, the RBI can invest up to 500 bln rupees of government cash surplus in government securities. But any cash balance in excess of 500 bln rupees stays with the RBI but the latter does not pay any interest to the government.  A heavy build-up of government’s cash balances with the RBI creates temporary strains on liquidity, pushing up overnight borrowing rates.

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