RBI absorbs ₹2.90 lakh crore via two VRRR auctions amid huge surplus liquidity

FILE PHOTO: A man stands in front of the Reserve Bank of India (RBI) logo inside its headquarters in Mumbai, India, February 6, 2026. REUTERS/Francis Mascarenhas/File Photo
| Photo Credit:
FRANCIS MASCARENHAS

On Wednesday, the Reserve Bank of India mopped up ₹2.90 lakh crore via two variable rate reverse repo (VRRR) auctions, given the substantial liquidity surplus in the system.

During the first auction, banks submitted bids totaling ₹3,17,088 crore against a notified amount of ₹2.50 lakh crore. The RBI accepted ₹2,50,025 crore at a cut-off weighted average rate of 5.24 per cent.

The second auction saw a subdued response, with bids of ₹40,302 crore for a notified amount of ₹1 lakh crore, which the central bank fully accepted.

Over the past month, the RBI has been repeatedly conducting VRRR auctions to drain excess liquidity and bring overnight money market rates in line with the repo rate.

As of September 15, the banking system is estimated to hold a liquidity surplus of approximately ₹9.85 lakh crore.

In addition to VRRR operations, the central bank last week unveiled Open Market Operation (OMO) sales of government securities worth ₹1 lakh crore across three tranches, with the first tranche of ₹50,000 crore scheduled for auction on September 17.

The remaining two tranches, each of ₹25,000 crore, will be auctioned on September 21 and September 28, according to the RBI.

The liquidity influx was driven largely by banks’ heavy mobilization of FCNR (B) deposits, which brought foreign currency into the system; subsequent RBI swaps then converted this into rupee liquidity for banks.

Alongside FCNR(B) inflows, end-of-month government spending, including salary and pension disbursements, further boosted liquidity in the banking system.

Published on September 16, 2026