Indian cash rates steady, liquidity remains tight

MUMBAI, Sept 5 (Reuters) - Indian overnight cash rates were steady on Friday, as a funds shortfall persisted after outflows towards treasury bill auctions drained cash from an already cash-stripped banking system.

At 3:05 p.m. call rates INROND= were at 9.00/9.10 percent, unchanged from its previous close.

"We had the treasury bill outflows today, so even the repo auction figure was higher," a dealer with a state-run bank, said.

"The inflows this week have been negated by the outflows and we may also have a bond auction next week, so call rates are likely to stay high," he added.

The Reserve Bank of India had sold a total of 75 billion rupees worth of treasury bills on Tuesday, the payments for which were made on Friday, draining liquidity from the system.

According to the central banks's borrowing calender, the government is scheduled to borrow 80 billion rupees via bonds between Sept. 5 and Sept. 12.

The central bank did not receive any bids at its daily reverse repo auction on Friday, while it pumped in 185.50 billion rupees into the system through the repo route, more than twice of what it infused on Thursday, indicating the extent of cash crunch in the system. (Reporting by Swati Bhat; Editing by Harish Nambiar)