The Reserve Bank of India (RBI) will conduct a 4-day Variable Rate Repo (VRR) auction under the Liquidity Adjustment Facility (LAF) on December 18, 2025, injecting ₹75,000 crore into the banking system. This move aims to address liquidity tightness ahead of year-end and tax outflows, supporting stable money market conditions.
The RBI announced its plan to conduct a 4-day Variable Rate Repo (VRR) auction under the Liquidity Adjustment Facility (LAF) on December 18, 2025. The auction will offer ₹75,000 crore to banks, allowing them to borrow funds against government securities for a four-day tenor. This step comes as the central bank seeks to fine-tune liquidity amid rising year-end outflows and advance tax payments, which typically strain the banking system.
The auction is part of the RBI’s ongoing efforts to ensure orderly money market conditions and keep short-term interest rates close to the policy repo rate, which was recently set at 5.25%. The operation will be conducted through the RBI’s core banking solution platform, e-Kuber, with successful bids accepted at their respective bid rates. Bids at or below the repo rate will be rejected.
Key Highlights:
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RBI will inject ₹75,000 crore through a 4-day VRR auction on December 18, 2025.
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The move addresses liquidity pressures from year-end and advance tax outflows.
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The auction is conducted under the Liquidity Adjustment Facility (LAF) via the e-Kuber platform.
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Bids will be accepted at bid rates; bids at or below 5.25% (current repo rate) will be rejected.
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This is the latest in a series of RBI liquidity management measures for December 2025.
Source: Reserve Bank of India (RBI), Reuters, Marketscreener