# RBI Injects Liquidity via 1 Lakh Crore Repo Auction as Cash Tightens

- URL: https://stocks.freetheai.org/news/rbi-injects-liquidity-via-1-lakh-crore-repo-auction-as-cash-tightens-fff605
- Published: 2026-10-20T04:12:06Z
- Category: central_banks; sentiment: bearish; impact: medium
- Symbols: [NSE:IDFCFIRSTB](https://stocks.freetheai.org/symbols/NSE-IDFCFIRSTB)
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The Reserve Bank of India launched its first liquidity infusion program in three months, holding a 1-lakh-crore variable rate repo auction on Monday. The central bank took action after the weighted average call rate climbed to 5.67%, exceeding the 5.50% repo rate by 17 basis points. Banks submitted bids worth 1.50 lakh crore during the operation, signaling strong demand for short-term cash.

Liquidity conditions in India's banking system have tightened due to increased demand during the peak festive season, routine monthly tax payments, and stricter daily cash reserve requirements that began on October 16. Although banking system liquidity held a surplus of 1.99 lakh crore as of mid-October, short-term money market rates reached the marginal standing facility rate, which acts as the upper ceiling of the central bank's rate corridor. According to market commentary, central bank liquidity operations focus on keeping overnight borrowing costs near the benchmark repo rate regardless of overall policy stance. IDFC First Bank Ltd. (NSE:IDFCFIRSTB) closed down 2.24% at 76.33 INR.

To keep cash conditions stable, the central bank has scheduled a second variable rate repo auction for 50,000 crore on Wednesday. Market participants will monitor whether these injections bring money market rates back toward the 5.50% policy benchmark and how liquidity evolves through the remainder of the festive period.

## Key points

- The Reserve Bank of India held a 1-lakh-crore variable rate repo auction on Monday, its first liquidity injection in three months.
- Strong demand saw commercial banks submit bids totaling 1.50 lakh crore during the repo operation.
- Overnight call rates rose to 5.67%, exceeding the 5.50% benchmark repo rate by 17 basis points amid festive cash demand.
- A second variable rate repo auction for 50,000 crore is scheduled for Wednesday to manage ongoing cash outflows.
- IDFC First Bank Ltd. (NSE:IDFCFIRSTB) closed down 2.24% at 76.33 INR on the day of the announcement.

## Questions and answers

### Why did the central bank inject liquidity into the banking system?

The central bank injected cash because overnight call rates climbed above the benchmark repo rate due to festive cash demand, monthly tax payments, and tighter cash reserve requirements.

### How much money was offered and bid for in the repo auction?

The central bank offered 1 lakh crore in a variable rate repo auction, receiving total bids of 1.50 lakh crore from banks.

### What additional liquidity measures are planned?

A second variable rate repo auction offering 50,000 crore is scheduled for Wednesday to help banks meet cash needs.