NEW DELHI (India CSR): The Reserve Bank of India (RBI) on Monday conducted an overnight Variable Rate Repo (VRR) auction to manage short-term liquidity in the banking system, resulting in an allotment of Rs. 21,151 crore.
According to details released by the central bank, the auction was held for a notified amount of Rs. 1,00,000 crore. However, banks placed bids worth only Rs. 21,151 crore, and the entire amount was allotted. The cut-off rate stood at 5.51 per cent, which was also the weighted average rate of the auction.
The one-day tenor auction allows banks to borrow funds from the RBI against government securities when they need immediate liquidity. In this case, demand from banks was significantly lower than the total amount on offer, reflecting comfortable liquidity conditions in the system.
No partial allotments were made as the amount of bids received matched the amount allotted.
RBI conducts such auctions regularly as part of its liquidity adjustment facility (LAF), ensuring there is neither excess shortage nor surplus of funds in the banking sector. This helps maintain stability in short-term interest rates, which directly impacts borrowing costs for businesses and households.
The results were announced by Ajit Prasad, Deputy General Manager (Communications), RBI.
(India CSR)
