(Reuters) -India’s central bank said on Thursday it will conduct a seven-day variable rate reverse repo auction worth one trillion rupees ($11.71 billion) on July 4, following a review of liquidity conditions in the banking system.
India’s banking system liquidity surplus hit a three-year high and stood at 3.75 trillion rupees on July 2, as per RBI data.
Last week, the Reserve Bank of India scrapped its plan to conduct a 14-day main operation scheduled for June 27, and announced a seven-day variable rate reverse repo auction instead.
The shift has pushed overnight call money market rates above the lower end of the interest rate corridor and towards the policy repo rate.
The policy repo rate stands at 5.5%, while the standing deposit facility rate rate is 25 basis points below that and forms the lower end of the rate corridor.
($1 = 85.4040 Indian rupees)
(Reporting by Anuran Sadhu in Bengaluru; Editing by Shailesh Kuber)
