The Reserve Bank of India’s (RBI) short-term repo auctions allocated ₹250,030 crore to banks across four operations, prompting State Bank of India (SBI) Research to question whether temporary funding fits the central bank’s shift to calibrated tightening.
RBI records show allotments of ₹100,014 crore on Oct. 19, ₹50,007 crore on Oct. 21, ₹50,006 crore on Oct. 22 and ₹50,003 crore on Oct. 23. The operations had seven-day, overnight, overnight and three-day terms, respectively. The overnight awards were due to reverse on Oct. 22 and Oct. 23; the other two were scheduled to mature Oct. 26. Cutoff rates rose from 5.51% in the first auction to 5.58% in the last.
The ₹250,030 crore tally combines separate awards with different repayment dates, rather than funds outstanding simultaneously. On Oct. 22, the RBI reported net liquidity absorption of ₹31,254.95 crore after accounting for that day’s activity and outstanding operations.
In its Oct. 23 Ecowrap report, SBI Research said October policy communications were more consistent than those in August but questioned lending to banks amid calibrated tightening. It recommended avoiding liquidity injections and withdrawals at the same time and widening the Liquidity Adjustment Facility corridor. The report also raised financial stability concerns as a possible factor behind the operations.
The RBI’s auction notices said the operations followed a review of current and developing near-term liquidity conditions but gave no more specific cause. The notices did not identify financial stability as a reason.
At its Oct. 5-7 meeting, the RBI’s six-member Monetary Policy Committee (MPC) raised the policy repo rate by 25 basis points to 5.50%, with all six members voting in favor. The committee adopted a calibrated tightening stance. Dr. Nagesh Kumar and Prof. Ram Singh favored keeping the stance neutral, according to the RBI’s MPC minutes. The RBI projected consumer-price inflation of 5.2% for fiscal 2026-27, including 6.0% in the October-December quarter. The MPC said, “Rate cuts are off the table in the near term.” Its next meeting is scheduled for Dec. 2-4.
