RBI to Withdraw Rs 1.5 Trillion via 8-Day VRRR Auction

08 Sep 2025 CW Team

The Reserve Bank of India (RBI) has announced an eight-day Variable Rate Reverse Repo (VRRR) auction to be held on Thursday, with the objective of withdrawing Rs 1.5 trillion from the banking system. This move comes amid a significant liquidity surplus, which stood at Rs 3.03 trillion as of Tuesday, according to the central bank’s latest data.

VRRR operations are a key liquidity management tool used by the RBI to absorb excess cash from the financial system and align short-term interest rates with the policy repo rate. By conducting such auctions, the RBI aims to maintain monetary stability and ensure efficient transmission of policy rates.

In the latest weekly auction of treasury bills, the cut-off yield on 182-day and 364-day T-bills rose by 2 basis points and 3 basis points, respectively. However, the 91-day T-bill held steady at 5.51 per cent, the same as the previous week.

The Weighted Average Call Rate (WACR)—the operating target of the RBI’s monetary policy—stood at 5.35 per cent on Wednesday, slightly lower than the previous close of 5.39 per cent.

This liquidity absorption exercise is seen as part of the RBI’s calibrated strategy to anchor short-term interest rates, manage inflation expectations, and maintain financial stability amid evolving macroeconomic conditions.

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