RBI infuses Rs. 75000 Cr to Banks ahead of GST, Advance Tax Drain-Out

The Reserve Bank of India ( RBI ) has taken precautionary measures by infusing Rs. 75,000 crore into the banking system through Variable Rate Repo ( VRR ) auctions.

This move comes ahead of anticipated liquidity strains due to advance tax and Goods and Services Tax ( GST ) payments, which are projected to withdraw nearly Rs. 2.5 trillion from the banking system.

The seven-day VRR auction conducted on Friday attracted bids worth Rs. 76,560 crore from banks, with the RBI accepting bids at a rate of 6.52%, lower than the marginal standing facility rate of 6.75%. This injection of funds aims to ensure sufficient liquidity in the banking sector amidst upcoming financial outflows.

Advance tax payments, due on March 15, and GST payments, due on March 20, are expected to total around Rs. 2.5 trillion, potentially creating a deficit in liquidity next week. The banking system is likely to face challenges as these significant sums flow out.

Source : https://www.taxscan.in/rbi-infuses-rs-75000-cr-to-banks-ahead-of-gst-advance-tax-drain-out/384533/