To manage additional demand of liquidity, RBI decided to Infuse Rupees 1 lakh crore in the banking system through special auctions in the month of March i.e. before close of the financial year 17-18.
RBI decided to conduct four variable-rate term repo auctions in March 2018. The amount in each auction would be Rs 25000 crore. These auctions will be conducted in addition to the regular 14-day variable rate term repo auctions.
Due to high corporate activities and outgo on account of tax payment liquidity is being under pressure. This decision of RBI is not only going to provide additional liquidity but also prevent any sharp rise in short term interest rates.