The Reserve Bank of India (RBI) absorbed Rs 67,755 crore through a 2-day Variable Rate Reverse Repo (VRRR) auction conducted on August 6, against a notified amount of Rs 1 lakh crore. The cut-off rate stood at 5.49%, while the weighted average rate was slightly lower at 5.48%.
This short-term liquidity absorption operation is part of the central bank's ongoing efforts to rein in surplus liquidity from the banking system. The total amount of bids received matched the amount accepted at Rs 67,755 crore.
The auction follows a series of liquidity-draining operations by the RBI over the past month. On August 1, the central bank had absorbed Rs 1,71,795 crore via a 7-day VRRR, also at a cut-off rate of 5.49%. In July, the RBI conducted multiple VRRRs, soaking up funds ranging from Rs 46,058 crore to as much as Rs 2,00,027 crore, reflecting an aggressive stance toward managing money market volatility.
The central bank's liquidity tightening is largely seen as a move to neutralise the surplus created by its record Rs 2.11 lakh crore dividend transfer to the Centre and the recent tweak in the cash reserve ratio (CRR). Together, these measures are aimed at stabilising short-term rates and reinforcing monetary transmission, especially as inflation shows signs of cooling and policy normalization continues.