RBI to hold overnight VRRR auction to absorb ₹50,000 crore liquidity

RBI to conduct overnight VRRR auction on Thursday to absorb Rs 50,000 crore as call and Tri-party repo rates remain below policy rate amid liquidity surplus

The Reserve Bank of India (RBI) on Wednesday announced a Rs 50,000 crore overnight Variable Rate Reverse Repo (VRRR) auction to be conducted on Thursday.

 

The RBI’s VRRR operations aim to absorb surplus liquidity from the banking system and anchor short-term rates closer to the policy repo rate.

 

The overnight weighted average call rate (WACR) settled at 5.37 per cent, compared to the previous day’s close of 5.38 per cent, while the overnight Tri-party repo rate settled at 5.33 per cent, up from 5.30 per cent on Tuesday.

 

WACR is the operating target of the monetary policy, which the central bank aims to keep close to the repo rate.

 

On Tuesday, net liquidity in the banking system stood at a surplus of Rs 2.68 trillion, according to the latest data from the RBI.

 

The RBI had received bids worth Rs 46,058 crore against a notified amount of Rs 50,000 crore at the three-day VRRR auction on Tuesday. The central bank accepted the bid amount at a cut-off rate of 5.49 per cent.