The Reserve Bank of India (RBI) received bids worth ₹577.97 billion against a notified ₹1,000 billion at its overnight Variable Rate Repo (VRR) auction. The central bank allotted the same amount, setting both the weighted average and cut-off rate at 5.26%. The undersubscription reflects cautious liquidity demand.
RBI’s Overnight VRR Auction
The Reserve Bank of India conducted its overnight Variable Rate Repo (VRR) auction, a key liquidity management tool, on January 1, 2026. The auction witnessed partial subscription, with bids falling short of the notified amount, signaling measured liquidity appetite among market participants.
Key Highlights:
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Auction Size: RBI notified ₹1,000 billion for the overnight VRR auction.
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Bids Received: ₹577.97 billion worth of bids were submitted.
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- Allotment: RBI allotted the entire ₹577.97 billion received.
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Rates: Weighted average rate stood at 5.26%, with the cut-off rate also fixed at 5.26%.
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Market Implication: The undersubscription suggests banks and financial institutions are cautious, reflecting balanced liquidity conditions at the start of the year.
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Policy Context: VRR auctions are part of RBI’s toolkit to manage short-term liquidity and ensure stability in money markets.
Analysts note that while the auction was undersubscribed, the steady rate signals stability in short-term borrowing costs, aligning with RBI’s broader monetary policy stance.
Sources: Business Standard, Economic Times, Moneycontrol