Author: Nishtha Mehrotra | EQMint

The Reserve Bank of India (RBI) has absorbed more than ₹6 lakh crore of excess banking-system liquidity through Variable Rate Reverse Repo (VRRR) auctions, as surplus funds had surged to nearly ₹11.16 lakh crore earlier in September.

The move is aimed at preventing overnight money-market rates from falling significantly below the RBI’s 5.25% repo rate. By September 22, the liquidity surplus had fallen to around ₹4.45 lakh crore, according to market estimates.

For consumers, the liquidity absorption does not automatically mean higher home-loan EMIs or immediate changes in FD rates. Financial Express notes that FD rates are likely to remain relatively stable in the near term while banks still hold surplus funds. The bigger trigger for borrowing and deposit rates would be any change in the RBI’s policy rate.

Disclaimer: This article is for information purposes only and is not investment advice.

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