KARURVYSYA.NSE

Karur Vysya Bank Ltd.

MUMBAI: Indian banks had limited appetite for borrowing from the central bank’s seven-day cash infusion operation on Tuesday, despite a narrowing in liquidity surplus, underscoring the need for more flexible options such as allowing prepayment, bankers said. The Reserve Bank of India infused 480 billion rupees ($5.2 billion) against an offer of 1.50 trillion rupees via the variable repo rate operation, in which banks compete for funds by quoting different rates. Liquidity surplus in the banking system, meanwhile, was at a seven-week low. Why it’s important The weak demand reflects a preference for very short-duration borrowing for flexibility. It signals that term funding, which is lending for longer than a day, is less attractive despite moderating cash surplus conditions. India’s forex reserves fall most in over a year on central bank’s rupee defence This was evident in late January, when the RBI managed to infuse 1.36 trillion rupees in a 90-day window after allowing banks to repay early.