The Reserve Bank of India will use an appropriate mix of liquidity management tools and strive to align the weighted average call rate with the policy repo rate, the RBI Governor Sanjay Malhotra said during his policy statement today.

The weighted average call rate largely traded in the lower half of the policy corridor amid the surplus liquidity conditions, while rates on commercial papers and certificates of deposit declined significantly during August-September, the governor highlighted.

Banking system liquidity increased substantially in August and September following measures taken to attract capital inflows.

System liquidity, measured by the net position under the liquidity adjustment facility, averaged a daily surplus of ₹5.9 trillion since the August monetary policy meeting.

The average daily net absorption under the liquidity adjustment facility increased to ₹5.8 trillion in August and further to ₹7.8 trillion in September, from ₹1.2 trillion in July.

The RBI conducted 55 variable rate reverse repo auctions, including two term VRRR auctions, and sold 1 trillion rupees of government securities through open market operations since the August policy.

Liquidity absorption measures, along with quarterly advance tax outflows, moderated the surplus in September.