India canceled sales of 26,000 crore Treasury Bills, RBI’s big decision among cash crunch

The Reserve Bank of India (RBI) on Thursday did not accept any bid in the auction of 91 and 182 days Treasury Bills. This step has been taken amidst cash shortage in the country’s banking system. RBI said in a statement that it rejected the dialects for sale of $ 26,000 crore for about 3 billion dollars. However, he sold the 364-day Treasury Bills of 7,000 crores at the rate of 6.5638 per cent.

Lack of liquidity in banking system

Liquidity (cash) situation in India’s banking system is still seriously deficit, even though RBI has recently taken cash injection steps. However, according to an index of Bloomberg Economics, banks have borrowed about 2 lakh crores from the central bank till Wednesday.

RBI measures to increase liquidity

From the end of last month, RBI has added 1 lakh crore in the system through three open market operations (OMOS). Apart from this, it has injected liquidity equal to $ 5 billion through forex swap and is also doing variable repo auctions of long-term T-Bills. At the same time, after the results of T-Bils sales on Thursday, the 5-year-old bond remained at 6.65 percent.

RBI’s previous step

In May, RBI announced a low borrowing for the government through Treasury Bills. This step was taken a few days before transferring a big dividend to the government. This payment to the government usually improves liquidity in the banking system over time.

The fastest growth in the Indian economy will remain

According to RBI’s latest monthly bulletin, India’s economy will also remain the world’s fastest growth in 2025-26. The RBI has cited the estimates of the International Monetary Fund (IMF) and the World Bank, saying that India’s GDP growth is expected to be between 6.5 per cent and 6.7 per cent in 2025-26. Despite the global abundance, high-priciency indicators are showing that the economic activity will improve in the second half of 2024-25, which will continue even further.

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