The Reserve Bank of India on Monday said it will discontinue the daily Variable Rate Repo (VRR) auctions with effect from June 11, 2025. This comes in the backdrop of ample liquidity in the banking system.
The central bank started conducting daily VRR from January 16, to help banks and standalone primary dealers (SPDs) to overcome the then tight liquidity conditions. RBI injects liquidity into the banking system via VRR auctions.
The move to discontinue VRR auctions comes in the backdrop of the liquidity surplus of about ₹2.45 lakh crore as on June 8.
Moreover, to further provide durable liquidity, the central has slashed the cash reserve ratio (CRR) by 100 basis points (bps) to 3.0 per cent (from 4.0 per cent) of Banks’ deposits in a staggered manner during the course of the year.
That the demand for funds under daily VRR has been coming down is underscored by the fact that banks and SPDs collectively drew only ₹3,711 crore against the notified amount of ₹25,000 crore at a weighted average rate of 5.51 per cent at the VRR auction conducted on Monday.