Mumbai, April 10: The Reserve Bank of India on Friday announced a 7-day Variable Rate Reverse Repo (VRRR) auction of Rs 2 lakh crore to absorb excess durable liquidity from the banking system, with the reversal date set for April 17. The auction is intended to withdraw surplus funds and help keep short-term interest rates within the RBI’s prescribed corridor.
A reverse repo is an operation where the central bank borrows funds from banks, absorbing liquidity from the system; a variable rate reverse repo (VRRR) means the RBI accepts bids at different rates. The RBI said the move follows its revised liquidity management framework, which prioritises VRRR operations over longer-term repo operations when managing system liquidity.
The central bank emphasised that such auctions are a routine tool to stabilise money-market conditions by draining temporary or durable surpluses, thereby supporting orderly functioning of interest rates and financial markets. Last year, the RBI moved away from using the 14-day VRR/VRRR as its primary short-term instrument; it now relies mainly on 7-day VRR/VRRR and other operations ranging from overnight up to 14 days, deployed at the RBI’s discretion based on system needs.
Separately, the RBI is administering the Government of India’s market borrowing programme, wherein Rs 8.20 lakh crore is planned to be raised in the first half (April–September) of financial year 2026-27. Gross market borrowings in the Budget estimate for 2026-27 were fixed at Rs 17.20 lakh crore, which were later adjusted to Rs 16.09 lakh crore after G-Sec switches conducted since the Budget presentation.
About 51% of the revised borrowing plan — Rs 8.20 lakh crore — will be concentrated in H1 and will be met through issuance of dated securities, including Rs 15,000 crore of Sovereign Green Bonds. The VRRR auction and the borrowing programme together reflect the RBI’s coordinated approach to managing liquidity and financing needs while maintaining stability in the financial system.
Original Source: https://theshillongtimes.com/2026/04/10/rbi-absorbing-rs-2-lakh-crore-excess-liquidity-via-reverse-repo-auction/
Category: Economy,NATIONAL,News Alert
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Publish Date: 2026-04-10 15:22:00
