Banking liquidity slips into deficit on tax outflows

Banking system liquidity has slipped into deficit driven by advance tax outflows, with call rates rising to 5.35% against the policy rate of 5.25%. Economists estimate around Rs 2 lakh crore exits the system during quarterly advance tax payments, compared to a daily average surplus of Rs 1.11 lakh crore in June. The RBI has been conducting variable rate repo operations, receiving bids of Rs 1.41 lakh crore against a Rs 2 lakh crore offer, and will conduct a Rs 30,000 crore government securities buyback on June 29 to manage liquidity.