Variable rate reverse repo auction will continue, says RBI governor

RBI Governor Shaktikanta Das (File pic)

Reserve Bank of India (RBI) Governor Shaktikanta Das on August 10 said the variable rate reverse repo (VRRR) auction will continue and there is no proposal to go back on it on a daily basis.

"The response could be better in that 14-day variable rate reverse repo (VRRR) auction, which was the main auction, however, it will continue. In fact, today Rs 93,000 crore of VRRR will get released. There is no proposal to going back on it on a daily basis," said Das.

So far in August, the central bank has not conducted any VRRR auctions despite the huge liquidity surplus in the banking system. Hence, dealers are expecting some announcements on VRRR in the policy.

Currently, liquidity in the banking system is in surplus of around Rs 2.48 lakh crore a day in August,

In the last few months, the central bank has been proactively managing liquidity by conducting various VRRR auctions, which led overnight rates to align with the repo rate.

The RBI has conducted 16 VRRR auctions since June, but the response it has received from banks has been muted.

According to RBI data, the central bank has conducted auctions for a total value of Rs 18 lakh crore since June. However, banks parked only Rs 7,73,023 crore in these auctions.