The Reserve Bank of India (RBI) absorbed ₹75,026 crore from the banking system through an overnight variable rate reverse repo (VRRR) auction on Wednesday as surplus liquidity remained elevated. Against a notified amount of ₹75,000 crore, banks submitted bids worth ₹87,993 crore, with the RBI accepting ₹75,026 crore at a cut-off and weighted average rate of 5.24%. The central bank has been conducting VRRR auctions to absorb excess liquidity and keep overnight money market rates aligned with the policy repo rate. Banking system liquidity was estimated at around ₹4.45 lakh crore as of September 22. The RBI has also been using open market operations to manage liquidity, including government securities sales worth ₹50,000 crore on September 17 and ₹25,000 crore on September 21. Of the ₹1 lakh crore in OMO sales announced in three tranches, the final ₹25,000 crore tranche is scheduled for September 28. The surplus liquidity has been driven partly by strong mobilisation of FCNR(B) deposits, which brought foreign currency into the banking system, followed by swaps with the RBI that increased rupee liquidity. Government spending around the month-end, including salary and pension payments, has also contributed to the liquidity surplus. The RBI’s continued liquidity-management operations are aimed at maintaining orderly conditions in the money market while absorbing excess funds from the banking system.
RBI Steps Up Liquidity Absorption Amid ₹4.45 Lakh Crore Surplus
