On February 22, the Reserve Bank of India (RBI) announced that it will conduct a 13-day variable rate repo auction (VRR) of Rs 1 lakh crore on February 23. The auction is scheduled to take place between 10:30 am and 11:00 am, with the reversal of these funds set for March 7.
“In light of current and evolving liquidity conditions, the RBI has decided to conduct a Variable Rate Repo (VRR) auction on February 23,” stated the RBI in a release.
This announcement comes at a time when the banking system is experiencing a deficit of liquidity amounting to around Rs 2.52 lakh crore.
Notably, the amount announced for the VRR auction is significantly lower than the actual reversal amount of Rs 3 lakh crore on February 23.
Recently, there have been reversals of three VRR auctions conducted by the RBI on February 9, February 16, and February 20, amounting to Rs 1.75 lakh crore, Rs 75,000 crore, and Rs 50,000 crore, respectively. It is noteworthy that in all these auctions, the bids submitted by banks exceeded the notified amount.
