The Reserve Bank of India (RBI) will conduct a variable rate repo (VRR) auction amounting to Rs 50,000 crore on Friday, the central bank said in a release on Thursday.
The timing for the auction is between 10:30 am and 11 am, and the date of reversal of funds is June 2. The VRR auction is being conducted based on the current and evolving liquidity system in the banking system, the RBI said. Currently, liquidity in the banking system is estimated to be in surplus of Rs 80,000 crore.
VRR auction is used as a liquidity-injecting tool by the RBI and variable rate reverse repo (VRRR) auctions are conducted to suck out liquidity. The announcement for the VRR auction came a day ahead of the RBI’s central board committee meeting on Friday, where the RBI is likely to declare a dividend for FY23 to the Centre.
RBI governor Shaktikanta Das had said the central bank will continue to adopt a nuanced and agile approach to the liquidity management.
“In the period ahead, the Reserve Bank will remain flexible in meeting the productive requirements of the economy through two-way operations, as may be necessary. We will also ensure the completion of the government borrowing programme in a non-disruptive manner while maintaining orderly market conditions during 2023-24,” Das had said.
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