RBI doubles liquidity injection to Rs 1.5 lakh crore ahead of tax payments

Kolkata: The Reserve Bank of India has doubled its liquidity injection plan to Rs 1.5 lakh crore through variable repo rate auction, to ensure comfortable liquidity in the system at the time of advance tax payments. The earlier notified amount was Rs 75000 crore.

"This is to pre-empt any possible liquidity shortage due to the advance tax payment," Bank of Baroda chief economist Madan Sabnavis said.

In parallel, the central bank will conduct a dollar-rupee buy-sell swap Tuesday to infuse durable rupee-liquidity.


"The increase in VRR will limit the transient liquidity tightness which be will be created post advance tax payments and GST payment," said Gaura Sengupta, chief economist at IDFC First Bank.

"More than Rs 2 lakh crore of liquidity will get drained due to advance tax payment on 15th and GST payment on 20th. The VRR will ensure overnight rates stay near repo rate. System liquidity will rise towards the end of the month when government expenditure picks up," she said.