Banks borrow ₹16,800 crore at RBI VRR auction, indicating comfortable liquidity conditions

Banks borrowed only 16,800 crore rupees from the Reserve Bank of India (RBI) at its four-day Variable Rate Repo (VRR) auction today, against the notified amount of 50,000 crore rupees, indicating relatively comfortable liquidity conditions in the banking system. According to the RBI, banks submitted bids worth 16,800 crore rupees, all of which were accepted. The cut-off rate and weighted average rate for the auction stood at 5.26 per cent, marginally above the policy repo rate of 5.25 per cent. The central bank had announced the four-day VRR auction under the Liquidity Adjustment Facility (LAF) to provide short-term liquidity to the banking system. The lower-than-notified demand suggests that banks required only limited liquidity support despite the RBI making Rs 50,000 crore available through the auction. Variable Rate Repo auctions are conducted by the RBI to inject liquidity into the banking system, with banks bidding for funds at market-determined interest rates.