RBI will conduct a Variable Rate Reverse Repo (VRRR) auction of ₹2 lakh crore on October 5, 2026, to manage liquidity. The 1-day auction will be held from 9:30 AM to 10:00 AM with reversal on October 6.
Liquidity Management via VRRR Auction
The Reserve Bank of India (RBI) has announced an Overnight Variable Rate Reverse Repo (VRRR) auction scheduled for October 5, 2026, under the Liquidity Adjustment Facility (LAF). The notified amount is ₹2,00,000 crore, with a tenor of one day and bidding window between 09:30 AM and 10:00 AM. Reversal of the transaction will occur on October 6, 2026.
This move reflects RBI’s proactive stance in managing short-term liquidity conditions in the banking system. The VRRR mechanism allows the central bank to absorb excess liquidity at variable rates, thereby fine-tuning monetary transmission. Such auctions are typically deployed during periods of surplus liquidity to anchor the policy rate corridor.
For banking institutions and market participants, participation in the VRRR auction offers an avenue to deploy surplus funds securely. The announcement aligns with RBI’s broader objective of ensuring stability in overnight rates and supporting orderly market functioning. Legal and compliance teams should monitor auction outcomes for implications on short-term interest rate trends and reserve management strategies.
