Surplus liquidity: RBI mops up ₹6 lakh crore in two auctions with mixed response
The Reserve Bank of India conducted two variable rate reverse repo auctions to absorb excess liquidity from the banking system, totaling ₹6 lakh crore. Despite the surplus, the response from banks was mixed, with lenders preferring shorter-tenure parking for their funds.
Why it matters
Effective liquidity management by the central bank is crucial for maintaining monetary policy transmission and controlling inflation.
The Reserve Bank of India on Monday (September 7, 2026) mopped up over ₹6 lakh crore of excess funds from the banking system in two auctions, which saw an underwhelming response from banks despite surplus liquidity.
The 30-day variable rate reverse repo (VRRR) auction announced last week received a tepid response from banks, and the central bank announced another auction in the first half of the day.
As against ₹7 lakh crore of notified amount, the first auction received a tepid response, with bids of just over ₹2.59 lakh crore being received for the 30-day VRRR, according to an official statement.
The bids for the 30-day VRRR were accepted at the cut-off and weighted average rate of 5.24%, according to the RBI.
Soon afterwards, the RBI announced an overnight VRRR auction with a notified amount of ₹5 lakh crore, which was completed at 11:30 hrs.
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