RBI to conduct 13-day VRR auction to infuse Rs 1 trillion on Friday

The Reserve Bank of India (RBI) will conduct a 13-day Variable Rate Repo (VRR) auction on Friday to infuse Rs 1 trillion into the banking system. The liquidity deficit in the system widened to Rs 2.51 trillion on Wednesday, according to the latest data by the central bank.

Despite the slew of VRR auctions being conducted by the RBI since February 8, the persistent liquidity deficit in the banking system has been largely around Rs 2 trillion in the period.

Earlier in February, when the liquidity deficit eased to Rs 1 trillion, overnight money market rates had dipped below the repo rate. In response, the central bank initiated a series of variable rate reverse repo auctions to realign the rates with the repo rate.