The RBI conducted an Overnight Variable Rate Reverse Repo (VRRR) auction for ₹3,00,000 crore on October 7, 2026, to absorb excess liquidity. The move follows a review of evolving liquidity conditions in the financial system.
RBI Conducts ₹3 Lakh Crore VRRR Auction to Manage Liquidity
On October 7, 2026, the Reserve Bank of India conducted a Variable Rate Reverse Repo (VRRR) auction under the Liquidity Adjustment Facility (LAF) for a notified amount of ₹3,00,000 crore and a tenor of one day. The auction was held from 12:00 noon to 12:30 PM, with reversals scheduled for October 8, 2026.
This operational move follows the RBI’s assessment of current and evolving liquidity conditions, aimed at fine-tuning short-term liquidity in the banking system. The VRRR mechanism allows the central bank to absorb surplus funds from the market at a variable rate, providing flexibility compared to fixed-rate tools. A similar auction on October 6, 2026, for ₹2,50,000 crore saw a cut-off rate of 5.24%, with full acceptance of bids at that rate.
These actions reflect proactive liquidity management by the RBI amid changing credit and deposit dynamics. For banking and financial sector lawyers, such operations are relevant in understanding the monetary transmission framework, particularly in disputes over interest calculation or liquidity coverage ratios under Basel III norms.