RBI aims to absorb ₹2 trillion through seven-day VRRR auction on Monday

Banking-system liquidity was in a surplus of Rs 3.61 trillion on Thursday, while the weighted average call rate settled at 5.09 per cent, central bank data showed

The Reserve Bank of India (RBI) plans to conduct a seven-day variable rate reverse repo (VRRR) auction on Monday, aimed at absorbing ₹2 trillion from the banking system.

 

A VRRR auction is a liquidity-absorption tool used by the RBI to temporarily absorb surplus liquidity from the banking system.

 

Net liquidity in the banking system was in a surplus of ₹3.61 trillion on Thursday, the latest data from the central bank showed.

 

The weighted average call rate (WACR) — the operating target of monetary policy — settled at 5.09 per cent, against the previous close of 5.18 per cent.

 

 

The standing deposit facility (SDF) rate, which currently stands at 5 per cent, is the interest rate at which banks park their surplus funds with the RBI without providing collateral. It forms the lower bound of the RBI’s policy corridor, with the repo rate in the middle and the marginal standing facility (MSF) rate at the upper bound.