Business

RBI turns to 30-day VRRR to absorb liquidity

By Sohail Khan 4 September 2026, 9:01 pm

Benchmarks
Nifty23,897.7024.25

Precious Metal
Gold (MCX) (Rs/10g.)153,650.00-2125.0

Enter search text:

Business News›News›Economy›Finance›RBI turns to 30-day VRRR to absorb excess liquidity

Read Today's Paper

RBI turns to 30-day VRRR to absorb excess liquidity
Synopsis

The Reserve Bank of India is conducting auctions to absorb excess funds. This liquidity stems from special dollar mobilization programs and forex inflows. The central bank aims to manage surplus funds and control inflation pressures. Analysts expect liquidity to potentially reach fifteen lakh crore rupees soon. RBI also sold government papers to manage market liquidity effectively.

RBI to suck out Rs 7 lakh crore via 30-day VRRR auction Monday

Kolkata: The Reserve Bank of India will hold a 30-day variable rate reverse repo (VRRR) auction Monday with a target to suck out Rs 7 lakh crore from the inter-bank market which is flush with excess liquidity following the special dollar-mobilisation programme.

This central bank has been conducting VRRR auctions almost every day to manage the surplus liquidity, which could potentially put additional pressure on inflation. The excess liquidity also led the weighted call money rate to 4.95%, significantly below the policy rate. RBI typically endeavours to align overnight call rates as close as possible to the policy repo rate, which stands at 5.25%.

Also Read: RBI mops up Rs 6.02 lakh crore through VRRR auctions against a Rs 8.50 lakh crore plan

The long-term VRRR was announced as the RBI is trying to suck out excess liquidity from the system on a durable basis, analysts said. Some expect the excess liquidity spawned by the forex-inflow programme could rise to Rs 15 lakh crore by the end of September.

"Based on the flows from FCNR-B and other schemes, core or durable liquidity surplus that was at Rs 8.06 lakh crore as of August 15 may cross

Rs 15 lakh crore by end of September," ICICI Securities said in a note.

Announcing the long-term VRRR auction Friday, RBI said participating banks can opt for premature reversal. Requests for premature reversal can be placed at least two working days prior to the original date of reversal.

Market response to the three-day variable rate reverse repo (VRRR) auctions, which the central bank conducted Friday, fell short of the earmarked quota. The regulator mobilised a total of Rs 6.02 lakh crore through two separate VRRR auctions against the cumulative notified amount of Rs 8.5 lakh crore.

Surplus liquidity in India’s banking system surged to a record high of Rs 10.3 lakh crore as of September 3, forcing the central bank to step up liquidity absorption operations. Record inflows exceeding $130 billion through the forex-inflow programs and the following dollar-rupee swaps are contributing to the massive liquidity overhang.

Meanwhile, the central bank sold two government papers — one new stock and the 7.71% 2066 stock for a total Rs 32,000 crore Friday. The new five-year stock saw the cut-off yield settling at 6.53% while the 7.71% 2066 paper saw the cut-off yield at 7.6618%, the RBI said.

Add as a Reliable and Trusted News Source
Add Now!

(You can now subscribe to our WhatsApp channel)

(You can now subscribe to our WhatsApp channel)

Read More News on
Reserve Bank of Indiavariable rate reverse repo auctionexcess liquidityinflation managementliquidity absorption operations

Enter search text:

Continue reading with one of these options:
Limited Access
Free
Login to get access to some exclusive stories

& personalised newsletters
Login Now

Unlimited Access
Starting @ Rs120/month
Get access to exclusive stories, expert opinions &

in-depth stock reports
Subscribe Now

Unlock Access to All Exclusives with ETPrime FREE TRIAL

15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers

Trial offer expiring in00 : 05 : 00

I'd rather pay ₹2599 now

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Prime Account Detected!

It seems like you're already an ETPrime member with

Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.

Unlock ETPrime's Exclusive Stories Today!

Subscribe to gain powerful insights on business, stock market and industry trends.

Big Price Drop! Flat 40% Off

Student Only Offer

Already a Member? Sign In now

Already a Member? Sign In now
Already a Member? Sign In now

Offer Exclusively For You

Save up to Rs. 700/-

ON ET PRIME MEMBERSHIP

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get Flat 40% Off

Then ₹ 1749 for 1 year

Avail Offer

Offer Exclusively For You

ET Prime at ₹ 49 for 1 month

Then ₹ 1749 for 1 year

Avail Offer

Special Offer

Get flat 40% off on ETPrime

Avail Offer
Avail Offer

Claim NowAlready a Member? Sign In now

Need Assistance?

Connect with an ETPrime expert for personalized support and guidance

+91 9484700004

' + h3 + '

' + h4 + '

' + listing + '

What’s Included with

ETPrime Membership

1Exclusive Insights That Matter

Uncover the truth with our investigative stories

Make strategic moves using the real-world case studies

Read industry-specific stories to identify emerging trends

Spot opportunities with in-depth insights that matter

Trump temper on H-1B visas is forcing Indians to do these things to stay put in US

What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.

Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?

The problem with lab grown diamonds
Why a falling rupee is a better option for the economy

A list of top 20 momentum stocks that have delivered massive returns in one year