With surplus liquidity in the banking system topping the ₹5 lakh crore mark, the Reserve Bank of India has decided to conduct a Variable Rate Reverse Repo (VRRR) auction on April 17, 2026, to suck out a portion of the surplus.
The central bank will be conducting a VRRR auction of seven days tenor for ₹2 lakh crore. As on April 15, 2026, surplus liquidity in the banking system amounted to ₹5,21,472 crore.
The effect of the surplus liquidity is underscored by the fact that overnight weighted average call rate (WACR) are being dealt at 5.08-5.09 per cent levels, below the policy repo rate of 5.25 per cent.
The RBI endeavours to anchor the operating target – the WACR - to the policy repo rate to ensure that its monetary policy framework is effective.
Liquidity absorption
“In view of the surplus transient liquidity conditions prevailing, it has been decided to conduct a Variable Rate Reverse Repo (VRRR) auction on Friday, April 17, 2026,” per a RBI statement.
At last Friday’s seven day VRRR auction, the RBI received offers to deploy funds aggregating ₹2,09,460 crore against the notified amount of ₹2 lakh crore. It accepted the offers aggregating ₹2,00,041 crore at a weighted average rate of 5.23 per cent.
In his recent monetary policy statement, RBI Governor Sanjay Malhotra said: “Going ahead, we will continue to be proactive and pre-emptive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy.”
Published on April 16, 2026