India's bank liquidity surplus rises after sharp drop last week

MUMBAI (Reuters) - India's banking system liquidity surplus rose to more than 2 trillion rupees on Wednesday, after dropping to a near three-year low below 500 billion rupees ($6.34 billion) last week.

The surplus rose more than four times to 2.02 trillion rupees, compared with last week, as inflows from the government's month-end spending helped, according to traders.

"After the tax outflows there was an acute liquidity crunch with most of the banks, but with month-end inflows coming in, the situation is far better now," a trader with a private bank said.

The one-day interbank call money rate was 4.80% at 0640 GMT, compared with the previous close of 4.40%, while the overnight triparty repo dealing system, or TREPS, was at 4.52%, flat from its previous close.

"The next set of outflows would be the non-Goods and Services Tax payments that will go out from the system later in the week, but surplus should remain above 1 trillion rupees in the near term," according to a trader with a private bank.

($1 = 78.8950 Indian rupees)

(Reporting by Dharamraj Lalit Dhutia; Editing by Shounak Dasgupta)