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Image Source : PTI RBI
The Reserve Bank of India (RBI) said on February 15 that it will conduct a seven-day variable rate repo auction of Rs 75,000 crore.
Scheduled between 10:30 AM and 11:00 AM, the reversal of these funds is set for February 23. The RBI’s decision to hold a variable rate repo (VRR) auction reflects its assessment of prevailing liquidity conditions.
Typically, such auctions are employed to inject liquidity into the banking system during periods of tightness or deficit. Currently, liquidity in the banking system is estimated to be in deficit by around Rs 2.24 lakh crore.
In February alone, the RBI has conducted seven VRR auctions to infuse liquidity, with two auctions held per day on February 7, 9, and 12, along with a single auction on February 14.
Despite banks submitting bids exceeding the notified amount in most auctions due to tight liquidity conditions, the central bank has only accepted amounts close to the notified amount in each auction.
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