RBI’s 2-Day VRR Auction Sees Tepid Demand; Cut-off Fixed at 5.26%

The RBI’s latest 2-day VRR auction attracted bids totaling ₹291.14 billion versus a notified ₹500 billion, resulting in allotments equal to the bid amount. The central bank set both the cut-off and weighted average rates at 5.26%, indicating tight alignment between market demand and policy signaling. While the undersubscription suggests adequate liquidity in the system, banks appear selective in tapping repo funds at current rates. A subsequent VRR operation also recorded a 5.26% cut-off and weighted average rate, reinforcing the short-term rate anchor in the RBI’s liquidity framework.

Key highlights

• Bid vs notified: ₹291.14 billion received against ₹500 billion notified.
• Allotment: ₹291.14 billion allotted, matching total bids.
• Rates: Cut-off and weighted average both at 5.26%.
• Liquidity signal: Undersubscription points to comfortable system liquidity and disciplined bank demand.
• Rate consistency: Recent VRR outcomes show stable short-term rate anchoring at 5.26%.

Sources: Reserve Bank of India press releases; Public Technologies