The RBI announced a ₹2 lakh crore overnight variable rate reverse repo (VRRR) auction on October 5, 2026, to manage liquidity. The auction reflects active liquidity correction amid evolving monetary conditions.
RBI to Conduct ₹2 Lakh Crore VRRR Auction
The Reserve Bank of India has announced the conduct of a Variable Rate Reverse Repo (VRRR) auction for ₹2,00,000 crore on October 5, 2026, with a tenor of one day. The auction will be held from 9:30 AM to 10:00 AM, with reversal scheduled for October 6, 2026.
This move is part of the RBI’s liquidity adjustment facility (LAF) operations aimed at managing short-term liquidity in the banking system. The decision follows a review of current and evolving liquidity conditions, which have seen surplus liquidity moderating due to government cash balances and bond issuance patterns.
Such VRRR operations allow the RBI to absorb excess liquidity at market-determined rates. For banks and financial institutions, this signals active management of the overnight call rate and may influence short-term borrowing costs. Market participants will closely monitor the cut-off rate to gauge the RBI’s stance on liquidity absorption.