The RBI on Thursday infused over Rs 1. 1 lakh crore into the banking system, a sign of the tight liquidity that is needed to contain inflation. This is the highest single-day liquidity infusion in over four years, although in percentage terms this is insignificant, bond market players said.
Compared to the aggregate deposit of Rs 178. 6 lakh crore as on February 24, according to the latest RBI data, the net infusion of about Rs 1. 1 lakh crore was just 0. 6% of the deposit figure.
At the height of the monetary-tightening spree, in October 2018, this percentage had risen above 1. 5% , money market figures show.One of the reasons for the tight liquidity in the system is the reversal of the long-term repo operations (LTROs).
In March-April 2020, just when lockdowns were disrupting the country, institutions had borrowed from the central bank through its specially created LTRO window, which were for about 1,100 days.