RBI to conduct daily VRR auctions to address banking system liquidity deficit
Mumbai: India’s central bank announced on Wednesday that it will conduct variable rate repo (VRR) auctions on all working days until further notice to ease liquidity constraints in the banking system, Reuters reported.
As of January 14, the liquidity deficit in the banking system stood at Rs 2.09 trillion, according to Reserve Bank of India (RBI) data.
VRR auctions are a mechanism used by the RBI to inject liquidity into the financial system.
The regulator will determine auction amounts based on its assessment of prevailing liquidity conditions. Details will be disclosed through press releases on the RBI website.
The first of these daily auctions is scheduled for January 16, with an amount of Rs 500 billion, as confirmed in an RBI press release.
To date, the RBI has conducted six VRR auctions this month to provide relief to cash-strapped lenders.
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