Mumbai: As part of its continued effort to provide liquidity, the Reserve Bank of India (RBI) on Monday said it will conduct Rs 1 lakh crore of short-term variable repo auction. The repo auctions will be conducted in two tranches.
The first repo auction of Rs 50,000 crore was held on Monday. "As a pre-emptive measure to tide over any frictional liquidity requirements on account of dislocations due to Covid-19, the RBI has decided to conduct the fine-tuning variable rate repo auctions for Rs 1 lakh crore in two tranches, " the central bank said in a release.
The RBI is offering funds to banks for 16 days through both the auctions. In the first repo auction, the RBI received Rs 31,585 crore of bids. It accepted all the bids at a cut off rate of 5.16 per cent. The second tranche of Rs 50,000 crore of repo auction will be conducted on March 24.
As a special measure, the RBI has also allowed standalone primary dealers to participate in these repo auctions. The RBI further said it is monitoring the evolving financial market conditions.
"We will calibrate our operations to meet any need for additional liquidity support, if warranted, to ensure normal functioning of markets, promote staff welfare and preserve financial stability," the central bank said.