RBI's Daily Cash Injection: Variable Rate Repo Auctions Boost Liquidity

The Reserve Bank of India (RBI) continues its daily Variable Rate Repo (VRR) auctions to manage liquidity in the banking system. Introduced on January 15, 2025, these auctions are conducted on all working days in Mumbai, with reversal on the next working day. The notified amounts vary based on liquidity assessments, ranging from ₹50,000 crore to ₹2,75,000 crore. These short-term measures complement longer-term initiatives like open market operations and dollar-rupee swaps. The VRR auctions help offset temporary liquidity fluctuations, such as those caused by quarterly advance tax payments, ensuring smooth functioning of the financial markets and supporting credit growth.

 

Source: Business Standard