The Reserve Bank of India will conduct an overnight variable rate reverse repo auction worth ₹750 billion on December 4, 2025. The move aims to absorb excess liquidity and stabilize money market rates. Analysts view it as part of RBI’s proactive strategy to maintain financial system stability.
The Reserve Bank of India (RBI) has announced it will conduct an overnight variable rate reverse repo (VRR) auction worth ₹750 billion on December 4, 2025. This move is part of the central bank’s liquidity management operations, aimed at balancing short-term cash flows in the financial system.
Key highlights from the announcement:
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The auction will allow banks to park surplus funds with the RBI at market-determined rates, helping absorb excess liquidity.
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Such VRR auctions are a critical tool for the RBI to fine-tune liquidity conditions, especially during periods of heightened inflows or seasonal demand.
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Market analysts suggest the timing reflects the RBI’s effort to stabilize money market rates ahead of year-end financial closures.
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The ₹750 billion quantum indicates the central bank’s proactive stance in ensuring systemic stability while maintaining flexibility in monetary operations.
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Overnight auctions are typically short-term measures, complementing longer-tenure liquidity management instruments like repo and term reverse repo operations.
This auction underscores the RBI’s commitment to maintaining orderly financial markets, ensuring banks have a reliable mechanism to manage surplus liquidity efficiently.
Sources: Reuters, Economic Times, Business Standard