Now Reading: RBI’s Rs 1.5 lakh crore reverse repo auction sees 36% under-subscription
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RBI’s Rs 1.5 lakh crore reverse repo auction sees 36% under-subscription
RBI’s Rs 1.5 lakh crore reverse repo auction sees 36% under-subscription
The Reserve Bank of India's 3-day Variable Rate Reverse Repo auction on August 21, 2026, received bids of only Rs 95,970 crore against a notified amount of Rs 1,50,000 crore, resulting in a 36% under-subscription. The cut-off rate and weighted average rate both settled at 5.24 per cent.
The auction, conducted under the Liquidity Adjustment Facility, was meant to absorb surplus liquidity from the banking system. The RBI had announced the auction on the same day, citing a review of current and evolving liquidity conditions. Bids were accepted for the full amount offered at the cut-off rate.
The under-subscription indicates that banks did not have enough surplus funds to offer to the central bank at the prevailing rate, or that they found the rate unattractive relative to other deployment options. The reversal date for the auction is August 24, 2026. The next RBI liquidity management operation will be watched for cues on systemic cash conditions.
Indian Opinion Analysis
Both sources are press releases from the RBI itself, so there is no divergent framing between sources. The RBI's first release frames the auction as a pro-active liquidity management tool, while the second release confirms that the auction was under-subscribed, bids worth only Rs 95,970 crore were accepted against a notified amount of Rs 1,50,000 crore. This gap matters: the central bank had intended to absorb more liquidity from the banking system but banks did not offer enough funds at the 5.24% cut-off rate. A cautious reading suggests that banks either had limited surplus cash or found the rate unattractive. The next step is to watch the RBI's subsequent auction calendars and overnight repo volumes for signs of whether systemic liquidity is actually tightening. (139 words)
Coverage: 2 sources, 2 neutral
Sources (2): rbi.org.in (neutral report), rbi.org.in (2) (neutral report)
This story was synthesised by AI from the 2 sources linked above. Methodology and corrections.
Updated: this story now draws on 2 sources.
