The Reserve Bank of India (RBI) on May 17 said it will conduct 14-day variable rate repo auction for a notified amount of Rs 1.25 lakh crore on May 17.
“On a review of current and evolving liquidity conditions, it has been decided to conduct a Variable Rate Repo (VRR) auction on May 17,” the RBI said in a release.
The bidding will take place between 10:30 AM and 11:00 AM, and reversal of these funds will take place on May 31, the release added.
Usually, the central bank conducts VRR auction to infuse liquidity in the banking system when it turns tight or fall in deficit mode. Also, when there is reversal of VRR auction conducted earlier.
Currently, liquidity in the banking system is estimated to be in deficit of around Rs 1.20 lakh crore, as per the RBI’s Money Market Operations as on May 15.
On May 17, there is a reversal of three VRR auction conducted by the RBI on May 3, May 13, and May 14, total worth Rs 2.50 lakh crore, in which banks have parked Rs 2.33 lakh crore.
The RBI conducted three-day VRR auction on May 14, four-day VRR on May 13, and 14-day VRR auction on May 3, as per RBI data.
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