You are here: Home » Finance » News » Banks
Business Standard

Banks park Rs 4.3 trn in Rs 5-trn variable rate reverse repo auction

From this year, the central bank has moved to variable rate reverse repo auctions, instead of fixed rate auctions

Topics
Banks | Reserve Bank of India

Anup Roy  |  Mumbai 

Banks
Illustration: Ajay Mohanty

on Friday parked Rs 4.31 trillion of their surplus funds with the (RBI) at a cut-off of 3.99 per cent, almost touching the repo rate, indicating the money market rates are not going to fall in a hurry even as the RBI goes easy on its liquidity absorption mode.

The central bank had surprised the bond market by announcing a Rs 5 trillion variable rate reverse repo (VRRR) auction, instead of an expected Rs 8 trillion auction, as the economy suffered dislocations due to the ongoing Omicron surge.

From this year, the central bank has moved to variable rate reverse repo auctions, instead of fixed rate auctions. This has meant that the reverse repo rate of 3.35 per cent is no longer very relevant. The auction cut-offs of variable rate reverse repo are also coming near the repo rate in line with the central bank’s plan to move towards a policy rate regime where the rate difference between liquidity absorption and infusion is narrowed to just 25 basis points (it is now at 65 bps).

The 10-year bond yields closed at 6.58 per cent, up by 2 basis points from its previous close.

Meanwhile, the rupee lost against the dollar and closed above 74 level. The Indian currency closed at 74.15 a dollar, from its previous close of 73.90.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sat, January 15 2022. 00:16 IST
RECOMMENDED FOR YOU
.