Now Reading: RBI to absorb Rs 2 lakh crore via two VRRR auctions
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RBI to absorb Rs 2 lakh crore via two VRRR auctions
The Reserve Bank of India will conduct two Variable Rate Reverse Repo (VRRR) auctions next week to absorb surplus liquidity from the banking system. On August 11, 2026, a 3-day VRRR auction…
The Story in Brief
The Reserve Bank of India will conduct two Variable Rate Reverse Repo (VRRR) auctions next week to absorb surplus liquidity from the banking system. On August 11, 2026, a 3-day VRRR auction for a notified amount of Rs 1,25,000 crore will be held, with reversal on August 14. The next day, August 12, an overnight VRRR auction for Rs 75,000 crore will take place, reversing on August 13. Both auctions follow the operational guidelines issued in February 2020. The RBI stated the decisions came after a review of current and evolving liquidity conditions.
The Indian Opinion
Some market commentators may read these back-to-back auctions as the RBI turning hawkish or signalling persistent excess liquidity. In reality, the central bank is merely fine-tuning short-term cash conditions through its standard toolkit. The notified amounts are modest relative to system surplus, and the use of variable rate auctions lets the market discover the price for absorbing funds. The real test will be the cut-off rates: if they settle above the repo rate, it would point to genuine cash tightness rather than a glut. Will both auctions be fully subscribed?
Sources (2): rbi.org.in, rbi.org.in (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
