New Delhi: Banks showed muted demand at the Reserve Bank of India’s three-day variable rate repo (VRR) auction on Friday, signalling a limited need for short-term funds even as the central bank continued to support liquidity in the money market.
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The RBI received bids worth Rs 16,750 crore against the notified amount of Rs 1 lakh crore and accepted the full amount at a cut-off and weighted average rate of 5.26 percent.
System liquidity remained in surplus, though at a lower level. According to the latest RBI data, the surplus stood at about Rs 19,163.11 crore as of June 18.
The latest auction response suggests banks are still well supplied with funds despite recent liquidity support from the central bank. The VRR mechanism is used to manage short-term liquidity and keep overnight rates aligned with the policy corridor.
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In recent days, the RBI has infused about Rs 1.89 lakh crore through VRR operations of different tenors to ease liquidity pressures and anchor overnight money-market rates.
That included Rs 72,300 crore injected on Wednesday through two VRR auctions, Rs 89,440 crore through a seven-day VRR auction on June 16, and Rs 28,220 crore through an overnight VRR auction on June 15, according to RBI data.
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