The Reserve Bank of India (RBI) on Tuesday absorbed Rs 3,93,352 crore through <a href="https://www.mid-day.com/business/business-news/article/rbis-vrrr-auction-receives-tepid-response-from-banks-gets-rs-259-lakh-crore-bids--23648796" target="_blank" rel="none noopener">variable rate reverse repo (VRRR) auction</a> amid huge surplus liquidity in the banking system.
The central bank received bids worth Rs 3,93,352 crore, for a notified amount of Rs 5 lakh crore. It accepted all bids at a cut-off and weighted average rate of 5.24 per cent, according to a release.
Over the last month, the RBI has been conducting VRRR auctions in order to absorb excess surplus liquidity from the banking system and align the overnight money market rates to the repo rate.
The liquidity surplus in the banking system was estimated to be around Rs 10.73 lakh crore on September 11.
Apart from VRRR auctions, last week, the central bank announced Open Market Operation (OMO) sales of government securities for a notified amount of Rs 1 lakh crore in three tranches, with the first tranche auction to be held on September 17.
The first tranche of Rs 50,000 crore will be held on September 17, and Rs 25,000 crore each tranches on September 21 and September 28, RBI said.
The banking system was flushed with liquidity due to heavy <a href="https://www.mid-day.com/business/business-news/article/india-becomes-worlds-fourth-largest-forex-reserve-holder-on-higher-fcnr-b-deposit-mobilisation-23649651" target="_blank" rel="none noopener">mobilisation of FCNR (B) deposits</a> by banks, bringing in foreign currency into the system, while subsequent swaps with the RBI provided rupee liquidity to banks.
Besides FCNR (B) inflows, month-end government expenditure, including payments toward salaries and pensions, also added to liquidity in the banking system.
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RBI received bids worth Rs 3,93,352 crore, for a notified amount of Rs 5 lakh crore  at a cut-off and weighted average rate of 5.24 per cent

RBI absorbs Rs 3.93 lakh crore surplus liquidity via VRRR auction

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The central bank received bids worth Rs 3,93,352 crore, for a notified amount of Rs 5 lakh crore. It accepted all bids at a cut-off and weighted average rate of 5.24 per cent

RBI absorbs Rs 3.93 lakh crore surplus liquidity in banking system via VRRR auction

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