The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said that the surplus liquidity in the banking system has come down to Rs 3.8 lakh crore, from Rs 6.7 lakh crore in April-May, adding that a rise in term deposit rates should increase liquidity for the financial sector. 

The sharp moderation in surplus liquidity from July 20, mainly on account of tax and capital outflows, resulted in money market rates firming up above the repo rate. To alleviate the liquidity stress, the RBI conducted a variable rate repo auction of Rs 50,000 crore of 3 days maturity on July 26, 2022. 

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The RBI will remain vigilant on the liquidity front and conduct two-way fine-tuning operations as and when warranted – both variable rate repo (VRR) and variable rate reverse repo (VRRR) operations of different tenors, depending on the evolving liquidity and financial conditions,” said Das.

The RBI Governor announced that the Monetary Policy Committee voted unanimously to hike the benchmark interest rate by 50 basis points (bps) to 5.4% with immediate effect.  The Standing Deposit Facility (SDF) rate is adjusted to 5.15%. The Marginal Standing Facility (MSF) and bank rate are revised at 5.65%.  

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Foreign Direct Investment (FDI) improved to 13.6 billion dollars in the first quarter of the current financial year as compared to 11.6 billion dollars in the first quarter of last year said RBI Governor Shaktikanta Das.

The MPC has retained the Consumer Price Index (CPI) Inflation projection for FY23 at 6.7%. The second quarter CPI is seen at 7.1% compared to 7.4% previously, while Q3 CPI is seen at 6.4% against 6.2% projected earlier. The Q4 CPI projection is retained at 5.8%. The Q1FY24 CPI is seen at 5%.  

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The Real GDP growth projection for FY23 retained at 7.2% with Q1 at 16.2%, Q2 at 6.2%, Q3 at 4.1% and Q4 at 4% with risks broadly balanced. The real GDP growth for Q1 FY24 is projected at 6.7% said RBI Governor Shaktikanta Das.