RBI To Conduct Rs 1.5 Lakh Cr 10-Day VRRR Auction To Absorb Excess Surplus Liquidity

Mumbai: The Reserve Bank of India (RBI) on Thursday said it will conduct a 10-day variable rate reverse repo (VRRR) auction for a notified amount of Rs 1.50 lakh crore to remove excess surplus liquidity in the banking system.

“On a review of current and evolving liquidity conditions, it has been decided to conduct a Variable Rate Reverse Repo (VRRR) auction on Friday, October 9,” the RBI said in a notification.

The auction will take place between 9:30 AM and 10 AM. The reversal of these funds will take place on October 19.

The liquidity in the banking system was estimated to be in a surplus of around Rs 4.24 lakh crore as of October 7, according to RBI data.

Earlier today, RBI’s 29-day VRRR auction received a tepid response, even though banking system liquidity is in a huge surplus.

However, the central bank’s second VRRR auction, with a one-day maturity, received a good response, reflecting banks’ reluctance to park money with the RBI for a longer tenure.

The central bank received bids worth Rs 79,655 crore for the 29-day VRRR auction against a notified amount of Rs 2 lakh crore, which it accepted fully at a cut-off and weighted average rate of 5.49 per cent.

The overnight VRRR auction received bids worth Rs 1,60,664 crore for a notified amount of Rs 2 lakh crore. The RBI accepted the entire amount offered during the auction at a cut-off and weighted average rate of 5.49 per cent.

During August and September, system liquidity increased substantially due to the recent measures undertaken to attract capital inflows. As measured by the net position under the LAF, system liquidity averaged a daily surplus of Rs 5.9 lakh crore since the last MPC meeting in August 2026.

The average daily net absorption under the LAF increased from Rs 1.2 lakh crore in July 2026 to Rs 5.8 lakh crore in August and further to Rs 7.8 lakh crore in September.

The Reserve Bank conducted 55 variable rate reverse repo auctions, including two term VRRR auctions and OMO sales amounting to Rs 1 lakh crore since the August 2026 policy, the RBI said.

(Disclaimer: Except for the headline, this article has not been edited by HDFC Sky editorial team and is auto-generated from PTI feed.)