RBI’s big step: Rs 1.41 lakh crore injected into the banking system, loans for common people expected to become cheaper

RBI Major Move On Indian Banks: The Reserve Bank of India on Tuesday released Rs 1,41,171 crore, injecting huge amount of cash into the banking system. This step has been taken at a time when liquidity shortage was being seen in the system. If statistics are to be believed, in recent times the banking system had gone from surplus to deficit. According to experts, this will increase the ability of banks to give loans and in future it may become easier and cheaper for common people to take loans.

Why was there shortage of cash?

According to the data, there was a surplus of Rs 30,685 crore in the banking system on June 21, which turned into a deficit of Rs 19,971 crore by June 22. This change was mainly due to GST payments and other clearance pressures, which reduced the availability of cash in the market.

RBI intervention through VRR auction

RBI made this amount available to banks through Variable Rate Repo (VRR) auction. VRR is a tool through which the central bank temporarily balances the shortage or excess of cash in the banking system. The average cut-off rate in this auction was 5.26 percent, which helped in controlling interest rates and liquidity in the market.

How will common people get the benefit?

When there is sufficient cash in the banking system, it becomes easier for banks to give loans. This increases the availability of loans like home loan, auto loan and business loan. According to experts, this improves credit flow in the market and can gradually reduce the pressure on interest rates.

impact on money market

Due to lack of liquidity, pressure on overnight money market rates had increased. According to recent data, the call money rate reached 5.43 percent, which was even higher than the RBI’s repo rate. To balance this situation, the central bank has injected temporary cash of about Rs 2.43 lakh crore into the system through various VRR auctions in the last few days.

Also read- Directors in co-operative banks will not be able to remain for more than 10 years, cooling-off of 3 years is mandatory.

Over the past few days, the RBI has made liquidity available through VRR in several phases, ranging from overnight to seven-day auctions. Its objective is to maintain stability in the banking system and prevent liquidity crisis in the market.