The Reserve Bank of India (RBI) has announced that it will conduct a four-day variable rate reverse repo (VRRR) auction worth INR 1 trillion ($12.12 billion) on Monday. The auction will be conducted between 2:00 p.m. IST and 2:30 p.m. IST, and will mature on Friday. The RBI infuses liquidity into the banking system using repos and sucks it out using reverse repos. Banks had only parked 508.68 billion rupees with the RBI under a 14-day VRRR on Friday, and remain concerned about participating in the longer tenor VRRR auction amid fears that scheduled tax outflows over the next two weeks could reduce surplus liquidity and cause temporary mismatches in their books. India’s banking system has a liquidity surplus of close to INR 2.4 trillion, which is the highest figure in the last two months and has kept overnight rates lower.
Indian Central Bank to Conduct 4-Day VRRR Auction worth INR 1 Trillion on June 5
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