RBI to conduct overnight VRR to infuse Rs 25,000 crore on Tuesday

The Reserve Bank of India (RBI) will conduct an overnight variable rate repo auction (VRR) on Tuesday to inject up to Rs 25,000 crore into the banking system, the central bank said on Monday.

The RBI has been conducting variable rate repo auctions to infuse liquidity into the banking system. In the two-day VRR auction conducted by the RBI on Monday, bids were received for Rs 73,290 crore, against a notified amount of Rs 25,000 crore.

The liquidity deficit in the banking system widened to Rs 2.58 trillion on Sunday, according to data by the RBI.

In the preceding VRR auctions, the central bank received a significant response, with banks submitting bids ranging between 2.5 to 3.2 times the bidding amounts due to tight liquidity conditions in the system. Liquidity remained largely in deficit mode in the third quarter. The central bank had conducted a VRR auction after six months on December 15.