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With Banks bulking up deposits due to quarter end considerations, the Reserve Bank of India (RBI) on Monday received offers aggregating ₹2,40,598 crore against the notified amount of ₹2 lakh crore at the 3-day variable rate reverse repo (VRRR) auction.
Banks usually build up short-term deposits towards the end of the every quarter, resulting in surplus funds.
With limited credit deployment opportunities, Banks sought to park more than the notified amount at the VRRR window.
RBI accepted offers aggregating ₹2,00,014 against the notified amount of ₹2 lakh crore at the cut-off rate of 3.99 per cent.
Meanwhile, the central bank said it will conduct a 7-day VRRR auction ₹Rs 2 lakh crore on January 4.
In his last bi-monthly monetary policy statement, RBI Governor Shaktikanta Das had said: “In our endeavour to restore the revised liquidity management framework instituted in February 2020, the Reserve Bank has been rebalancing the liquidity surplus by shifting it out of the fixed rate overnight reverse repo window into the variable rate reverse repo (VRRR) auctions of longer maturity.
“The objective is to re-establish the 14-day VRRR auction as the main liquidity management operation….The Reserve Bank will continue to rebalance liquidity conditions in a non-disruptive manner while maintaining adequate liquidity to meet the needs of the productive sectors of the economy.”
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