The Reserve Bank of India (RBI) announced on February 13 its plan to conduct a two-day variable rate repo auction amounting to Rs 25,000 crore, scheduled for February 14.
“In light of current liquidity conditions and their ongoing evolution, the RBI has opted to hold a Variable Rate Repo (VRR) auction on February 14,” stated the RBI in a press release.
The auction is set to take place between 10:30 AM and 11:00 AM, with funds being reversed on February 16.
Variable Rate Repo auctions are typically employed by the central bank to inject liquidity into the banking system during periods of tight or deficit conditions.
Presently, estimates suggest that liquidity within the banking system is experiencing a deficit of approximately Rs 2.13 lakh crore. Throughout February, the RBI has already conducted six VRR auctions to address liquidity concerns, holding two auctions per day on February 7, 9, and 12.
In most auctions, banks submitted bids surpassing the notified amount, indicative of tight liquidity conditions. However, the RBI accepted amounts close to the notified figure in each auction.
