FCNR rush leaves banks swimming in ₹6.65 lakh crore liquidity
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Much of it is sitting on the sidelines or being parked in the RBI's variable rate reverse repo (VRRR) operations, which are ultra-short-term instruments. Even here, treasury heads are being selective about what tenure they deploy their funds at. Also Read: Numbers Boost: FCNR-B inflows help banks cut expensive bulk deposits "The preference is to park funds for a tenure of 1-3 days at 5.24% in VRRR, rather than a seven day or 15 day operation. The liquidity is also not very homogeneously spread across the system because only a few big banks are getting the benefit of the FCNR(B) deposit," said Gopal Tripathi, head of treasury, Jana Small Finance Bank. On August 31, a 15-day VRRR of ₹6 lakh crore attracted bids of ₹1.34 lakh crore. The RBI will conduct an overnight VRRR ₹5 lakh crore on Wednesday. "Most of the liquidity is being parked in VRRRs and in the RBIs standing deposit facility (SDF)," said AN Vinod, head treasury, South Indian Bank. Also Read: Indian banks slash FCNR deposit rates by up to 310 basis points The daily average system liquidity stood at ₹3.67 lakh crore in August, versus ₹1.07 lakh crore. Consequently, the weighted average call rate (WACR) for August stood at 5.10%, while for July the WACR was at 5.23%. The RBI prefers the WACR to be closely aligned with the repo rate. "This surplus liquidity will take some time to get absorbed into the credit market, but I expect the liquidity to normalise to ₹1-1.5 lakh crore by December," said Alok Singh, head of treasury, CSB Bank. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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