Muted demand for India’s RBI cash infusion signals need for flexible operations, analysts say

Indian banks had limited interest in borrowing from the Reserve Bank of India’s seven-day cash infusion operation on Tuesday. This occurred despite a narrowing of the liquidity surplus. Bankers noted the need for more flexible options. One such option mentioned was allowing prepayment of funds.

The seven-day infusion was conducted as part of RBI’s liquidity management efforts. The borrowing appetite remained muted even as liquidity conditions changed. Bankers pointed to flexibility as a desired feature in such operations.