RBI absorbs ₹2,10,192 cr in 2 overnight VRRR auctions
Business
On Monday, the Reserve Bank of India (RBI) absorbed ₹2,10,192 crore liquidity from banks through two overnight auctions called Variable Rate Reverse Repo (VRRR).
Basically, this is RBI's way of managing all the extra cash floating around in the banking system and making sure things don't get too wild with interest rates.
Banks hold ₹5.16L cr surplus
Right now, banks are sitting on a liquidity surplus of about ₹5.16 lakh crore. This pile-up mostly comes from foreign currency deposits and big government payments like salaries and pensions at month-end.
By running these VRRR auctions, RBI tries to keep overnight interest rates steady and close to its target rate, so there are no sudden surprises for anyone borrowing or lending money overnight.