RBI Withdraws ₹2 Trillion in Liquidity Through VRRR Auction
RBI pulls out ₹2 trillion transient liquidity via 7-day VRRR auction
Business Standard
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On Friday, the Reserve Bank of India (RBI) withdrew ₹2.00031 trillion (approximately $24 billion USD) in transient liquidity from the banking system via a seven-day variable rate reverse repo (VRRR) auction. This move comes as the central bank aims to manage liquidity effectively amidst a surplus of around ₹4.09 trillion.
- 01RBI withdrew ₹2.00031 trillion in liquidity through a VRRR auction.
- 02The auction saw bids exceeding ₹2.28 trillion, indicating strong demand.
- 03The cut-off rate for accepted bids was set at 5.24 percent.
- 04Current banking system liquidity surplus is estimated at ₹4.09 trillion.
- 05RBI plans to maintain proactive liquidity management to support economic growth.
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The Reserve Bank of India (RBI) executed a significant liquidity withdrawal of ₹2.00031 trillion (approximately $24 billion USD) through a seven-day variable rate reverse repo (VRRR) auction on Friday. The auction attracted bids totaling ₹2.28098 trillion, surpassing the notified amount of ₹2 trillion. The RBI accepted bids at a cut-off rate of 5.24 percent and a weighted average rate of 5.23 percent. Currently, the banking system maintains a liquidity surplus of around ₹4.09 trillion. This strategic move follows a similar auction conducted on April 10, where the RBI withdrew ₹2.00041 trillion. RBI Governor Sanjay Malhotra emphasized the central bank's commitment to proactive liquidity management to ensure adequate liquidity for the economy's productive needs.
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This liquidity management action by the RBI helps stabilize the banking system, ensuring that banks have the necessary funds to lend to businesses and consumers, which is crucial for economic growth.
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