The Reserve Bank of India (RBI) received bids worth ₹191.56 billion against a notified ₹1 trillion at its latest 2-day Variable Rate Repo (VRR) auction. The central bank allotted the same amount, setting the weighted average and cut-off rate at 5.26%. The muted response signals comfortable liquidity conditions.
The Reserve Bank of India conducted a 2-day Variable Rate Repo (VRR) auction, inviting bids worth ₹1 trillion. However, demand was subdued, with banks submitting bids totaling only ₹191.56 billion. The RBI allotted the full bid amount, with both the weighted average and cut-off rate fixed at 5.26%.
The tepid participation reflects the prevailing liquidity surplus in the banking system, reducing the need for short-term borrowing. Analysts note that while VRR auctions are a key liquidity management tool, the muted response highlights banks’ cautious approach amid stable funding conditions.
Key Highlights
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Auction Size: Notified amount of ₹1 trillion.
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Bids Received: ₹191.56 billion, indicating low demand.
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Allotment: RBI allotted the entire bid amount.
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Rates: Weighted average and cut-off rate both at 5.26%.
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Liquidity Context: Comfortable surplus liquidity reduced reliance on repo borrowing.
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Market View: Reflects cautious banking sector positioning and stable short-term funding environment.
The outcome underscores the RBI’s steady liquidity management stance, with banks relying less on repo facilities amid surplus conditions.
Sources: Reuters, Reserve Bank of India, Business Standard