Mumbai: The Reserve Bank of India (RBI) on Friday said that it absorbed Rs 2.23 lakh crore from the banking system through a Variable Rate Reverse Repo (VRRR) auction as part of its ongoing efforts to manage surplus liquidity and align short-term money market rates with the policy repo rate.
According to an official release, the central bank received bids worth Rs 2,22,629 crore against the notified amount of Rs 2.25 lakh crore and accepted all the bids. The funds were absorbed at a weighted average rate of 5.24 per cent.
The RBI has been conducting VRRR auctions since last month to drain excess liquidity from the banking system and ensure overnight money market rates remain aligned with the repo rate.
Moreover, data from the central bank showed that liquidity in the banking system was estimated to be in surplus of around Rs 6.94 lakh crore as of September 17.
The latest liquidity absorption operation comes a day after the RBI sold government securities worth Rs 50,000 crore through an Open Market Operation (OMO) auction.
In addition, the central bank has also scheduled two additional OMO sales of Rs 25,000 crore each on September 21 and September 28 as part of its broader liquidity management strategy.
Earlier this week, the RBI absorbed Rs 3.93 lakh crore through another VRRR auction. The central bank had received bids worth Rs 3,93,352 crore against a notified amount of Rs 5 lakh crore and accepted the entire bid amount at a cut-off and weighted average rate of 5.24 per cent.
The liquidity surplus in the banking system was estimated at around Rs 10.73 lakh crore as of September 11, indicating that excess funds have moderated in recent days amid the RBI’s liquidity absorption measures.
(IANS)
