RBI's VRR auction draws ₹93,241cr bids, takes ₹50,007cr at 5.52%
The Reserve Bank of India just held its overnight variable-rate repo (VRR) auction, and banks jumped in with nearly ₹93,241 crore in bids, almost twice what RBI aimed for.
In the end, RBI took ₹50,007 crore at a 5.52% rate.
This is all part of its plan to soak up extra cash floating around in the banking system.
RBI hikes CRR, announces OMO sales
To keep things balanced, RBI has made banks hold more cash daily (raising the daily maintenance requirement for the CRR to 99% from 90% earlier) and has announced OMO sales of government securities.
These steps are meant to drain the large surplus liquidity in the banking system, which had built up following large inflows of FCNR(B) deposits, and help in transmission of the recent 25-basis-point rate hike to deposit and lending rates, basically keeping things steady for everyone using banks right now.