The Reserve Bank of India (RBI) will conduct a 7-day Variable Rate Reverse Repo (VRRR) auction for Rs 1 lakh crore on Friday, July 4. This is part of its ongoing liquidity management under the Liquidity Adjustment Facility (LAF). The auction window is scheduled between 10:00 AM and 10:30 AM, with the reversal date set for July 11, 2025.
The auction comes amid a surge in surplus liquidity, which touched Rs 3.75 lakh crore on July 2, the highest level since July 2022. By conducting frequent VRRRs, the RBI aims to absorb excess liquidity.
Looking ahead, liquidity conditions may remain elevated. The upcoming CRR cut, expected to release Rs 2.5 lakh crore between September and December, has not yet entered the system. Additionally, the RBI’s Rs 2.69 lakh crore dividend payout remains unutilized. Together, these flows could push the surplus closer to Rs 5 lakh crore by November.
In the previous 7-day VRRR auction held on June 27, banks parked Rs 84,975 crore against the notified amount of Rs 1 lakh crore. The RBI accepted the entire bid amount at a weighted average rate of 5.45%.