RBI to conduct 4-day VRRR worth Rs 1 lakh crore on June 5

The Reserve Bank of India said it would conduct a four-day variable rate reverse repo (VRRR) auction for one trillion rupees ($12.12 billion) later on Monday.

"On a review of the current and evolving liquidity conditions, it has been decided to conduct a Variable Rate Reverse Repo auction," the RBI said.

The auction will be conducted between 2:00 p.m. IST and 2:30 p.m. IST, and will mature on Friday.


The RBI infuses liquidity into the banking system using repos and sucks it out using reverse repos.

The announcement comes after banks parked only 508.68 billion rupees with the RBI under a 14-day VRRR on Friday.

Banks remain wary of participating in the longer tenor VRRR auction amid fears that scheduled tax outflows over the next two weeks could reduce surplus liquidity and cause temporary mismatches in their books, traders said.

India's banking system liquidity surplus stays close to 2.4 trillion rupees, which is the highest in the last two months, and is keeping overnight rates lower.