RBI conducts ₹1L crore VRR auction to enhance banking liquidity
What's the story
The Reserve Bank of India (RBI) has conducted a ₹1 lakh crore Variable Rate Repo (VRR) auction today. The move comes as the central bank looks to boost liquidity in the banking system, which has been witnessing a significant decline. This is the first VRR auction since July 29, 2026, when RBI last used this tool to inject liquidity into the system.
Liquidity management
Absorbing excess liquidity since August
Since August 6, the RBI has been in a liquidity absorption mode.
It has been conducting Variable Rate Reverse Repo (VRRR) auctions to absorb surplus liquidity.
This excess liquidity was generated by banks mobilizing Foreign Currency Non-Resident (FCNR(B)) deposits under the RBI's limited period swap window from June 8 to August 31.
Auction details
Bids worth ₹1,50,735cr received
In today's auction, RBI received bids worth ₹1,50,735 crore against the notified amount of ₹1 lakh crore.
The central bank accepted bids worth ₹1,00,014 crore at a weighted average rate of 5.52%.
This move is expected to help in transmitting the recent repo rate hike of 25 basis points to deposit and lending rates, as surplus liquidity gradually decreases toward a small deficit.
Liquidity indicator
Daily net absorption rises sharply
The average daily net absorption under the liquidity adjustment facility (LAF), an indicator of liquidity in the banking system, rose from ₹1.2 lakh crore in July 2026 to ₹5.8 lakh crore in August, and further to ₹7.8 lakh crore in September.
According to the latest RBI data, surplus liquidity in the banking system has come down to ₹1,85,873 crore as of October 18, 2026.