RBI plans VRRR auction to manage liquidity and call rates
pre-market1 source ↓written by the desknot a recommendation
- under the Standing
- ₹4.78 lakh crore
- Surplus liquidity exceeds
- ₹3 lakh crore
- the repo rate
- 0.25% below
The Reserve Bank of India (RBI) is set to conduct a short-tenor variable rate reverse repo (VRRR) auction to absorb excess liquidity from the banking system. Currently, banks have parked ₹4.78 lakh crore under the Standing Deposit Facility, reflecting limited credit demand. This move aims to align the overnight call money rate closer to the policy repo rate, which is currently under pressure due to elevated liquidity levels.
• Surplus liquidity exceeds ₹3 lakh crore
• Weighted average call rate is 0.25% below the repo rate
This auction could stabilize the money market and improve liquidity management.
Not investment advice. For informational purposes only.