RBI Absorbs Rs 2.90 Lakh Crore via Two VRRR Auctions to Tackle Huge Surplus Liquidity

The Reserve Bank of India (RBI) absorbed Rs. 2.90 lakh crore from the banking system on Wednesday through two variable rate reverse repo (VRRR) auctions, despite a significant surplus.

Bids of Rs. 3,17,088 crore were submitted to the central bank for a declared sum of Rs. 2.50 lakh crore in the first auction. Nevertheless, at a weighted average rate of 5.24 percent and a cut-off rate, it only took Rs. 2,50,025 crore. In the second auction, the central bank got a lukewarm reaction, with bids of Rs. 40,302 crore for a notified amount of Rs. 1 lakh crore, which it accepted completely.

Also Read

King’s Release Date OUT: Shah Rukh Khan Interacts with Fans, Confirms Bigger Action, Emotions, And Comedy

Fan vs Air Conditioner: Which Is Better for Your Health?

Turn Boredom Into Productivity: 7 Things to Do When You are Bored

Since last month, the RBI has conducted a number of variable reverse repo rate auctions to drain surplus liquidity from the banking system and bring overnight money market rates into line with the repo rate. As of September 15, the banking system’s liquidity is thought to be in surplus of roughly Rs. 9.85 lakh crore.

The central bank also said last week, in addition to VRRR, that it would sell Rs. 1 lakh crore worth of government securities through Open Market Operation (OMO) in three tranches, with the first tranche’s Rs. 50,000 crore auction set for September 17.

(Disclaimer: Given the input is on an information basis, please seek professional advice.)