 "RBI gets bids worth ₹585 crore against ₹75,000 crore at VRR auction")
Banks were reluctant to participate in the Reserve Bank of India’s three-day Variable Rate Repo (VRR) auction on Tuesday. The central bank received bids worth Rs 585 crore against the notified amount of Rs 75,000 crore.
Funds were parked at a cut-off rate of 5.51 per cent.
“The banks were not willing to park funds at a higher rate when they are getting it at a lower rate in the call market,” said a dealer at a primary dealership.
The weighted average call rate (WACR), the operating target of monetary policy, settled at 5.43 per cent on Tuesday, compared with the previous close of 5.44 per cent.
The RBI conducted a VRR auction after a gap of about a month. Over the past month, the central bank has been using Variable Rate Reverse Repo (VRRR) auctions to align overnight money market rates with the repo rate.
“There was no concrete reason for the RBI to conduct the VRR auction. Maybe they were expecting an outflow,” said a dealer at a primary dealership.