RBI resumes variable rate reverse repo operations

Mumbai: After a gap of almost a month, the Reserve Bank of India on Thursday announced a 14-day variable rate reverse repo (VRRR) operation, a tool used by the central bank to drain out surplus liquidity from the banking system.

The RBI said it will conduct a 14-day VRRR auction worth ₹2 lakh crore on June 2 from 10:30-11:00 am IST. The date of reversal of the VRRR is June 16.

The last time the RBI had held a variable rate reverse repo auction was on May 4.


Surplus liquidity in the banking system has risen sharply this week due to government expenditure and deposits of the ₹2,000 notes flowing into banks.

Hefty redemptions of government securities late last month and the Reserve Bank of India's decision to infuse liquidity through a 14-day variable rate repo operation also boosted liquidity.