Reserve Bank of India to conduct 7-day VRR auction to inject up to Rs 1 trn

The Reserve Bank of India (RBI) will conduct a 7-day variable rate repo (VRR) auction on Friday to inject up to Rs 1 trillion into the banking system, the central bank said on Thursday.

In the preceding four 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.

Banks had submitted bids amounting to Rs 3 trillion, against the notified amount of Rs 1.25 trillion, at the 7-day VRR auction conducted by the central bank on December 29. The deficit liquidity in the banking system widened to Rs 1.2 trillion on Wednesday. Liquidity has remained largely in deficit mode in the current quarter.

The central bank had conducted a VRR auction after six months on December 15.