RBI will conduct variable rate repo auction under LAF today

The Reserve Bank of India will conduct a variable rate reverse auction for Rs 75,000 crore on January 24, said the central bank in a release. The VRRR is undertaken to reduce the money flow by taking out existing cash present in the system.

The RBI has been rebalancing the surplus liquidity in the system by shifting it out of the fixed-rate overnight reverse repo window to VRRR auctions of longer maturity.

“This rebalancing has proceeded on a pre-announced glidepath and has evolved satisfactorily. The bank would continue to rebalance liquidity conditions in a non-disruptive manner while maintaining adequate liquidity to meet the needs of the productive sectors of the economy.” said RBI Governor, Shaktikanta Das.

“The objective is to re-establish the 14-day VRRR auction as the main liquidity management operation,” he added.

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