RBI to conduct 8-day VRRR auction to absorb ₹1.5 trn from banking system

The RBI's VRRR operations are aimed at absorbing surplus liquidity from the system and anchoring short-term rates closer to the policy repo rate

The Reserve Bank of India (RBI) plans to conduct an eight-day variable rate reverse repo (VRRR) auction on Thursday aimed to drain ₹1.5 trillion from the banking system. 

 

The net liquidity in the banking system was in a surplus of ₹3.03 trillion on Tuesday, latest data by the central bank showed. Meanwhile, the cut-off yield on 182-day, and 364-day treasury bills was set at 2 basis points, and 3 basis points higher, respectively, at the weekly auction.

 

 The cut-off yield on 91-day treasury bills was the same as the previous week at 5.51 per cent.  VRRRs are aimed at absorbing surplus liquidity from the system and anchoring short-term rates closer to the policy repo rate. The WACR, the operating target of monetary policy, settled at 5.35 per cent on Wednesday, against previous close of 5.39 per cent.