The Reserve Bank of India (RBI) on Tuesday conducted two overnight Variable Rate Repo (VRR) auctions to manage short-term liquidity, collectively allotting about Rs 1.40 lakh crore.
In the first auction, against a notified amount of Rs 1 lakh crore, the central bank received bids worth Rs 1.67 lakh crore. Of this, Rs 1,00,006 crore was allotted at a cut-off rate of 5.51%, with the weighted average rate slightly higher at 5.52%. Partial allotment was made, with 8.66% of bids at the cut-off accepted.
In the second auction, also for Rs 1 lakh crore, bids were significantly lower at Rs 40,510 crore, all of which were accepted. The cut-off and weighted average rates were both fixed at 5.51%.
The RBI has been alternating between Variable Rate Reverse Repo (VRRR) and VRR operations as part of its liquidity management toolkit, aiming to balance short-term money market rates with the policy repo rate of 5.50%. While VRRRs absorb surplus liquidity, VRRs provide funding support to the banking system during tighter conditions.