The Reserve Bank of India (RBI) announced that it will conduct a ₹1 lakh crore seven-day variable rate reverse repo (VRRR) auction on July 4 to withdraw surplus liquidity from the banking system. The auction is scheduled to be held between 10 AM and 11 AM, with the reversal date set for July 11.
“In view of the current and evolving liquidity conditions, the RBI has decided to conduct a Variable Rate Reverse Repo auction on Friday, July 04,” the central bank stated in an official release on July 3.
As of July 2, the banking system is operating with a liquidity surplus of ₹3.75 lakh crore, according to RBI data. This large surplus prompted the central bank to initiate additional measures to manage excess funds.
On July 1, Moneycontrol reported that the RBI was likely to continue VRRR auctions to align system liquidity with its target of 1% of net demand and time liabilities (NDTL).
Expectations of more such auctions grew after the previous VRRR failed to bring the surplus down to desired levels.
