 "Banks remain wary of RBI's VRRR auctions, park under 25% of target amount")
Banks remain hesitant towards the Reserve bank of India’s variable rate reverse repo auctions. They parked Rs 40,291 crore against the notified amount of Rs. 200,000 crore at a weighted average rate of 6.49 per cent.
The central bank has conducted six VRRR auctions so far this month to remove surplus liquidity from the system. The total notified amount in the last five auctions was Rs 6 trillion, in which banks have parked only Rs 364,232 crore.
The surplus liquidity in the system stood at Rs 1.58 trillion on Monday.
According to bankers, there are other investment avenues that fetch them higher returns than the 6.49 per cent that RBI offers. Banks are opting to invest in Treasury bills (T-bills), certificates of deposits (CDs), and commercial papers (CPs) rather than VRRR due to higher returns.