The Reserve Bank of India (RBI)’s 14-day variable rate reverse repo (VRRR) auction met with a muted response although it was better than recent auctions. Banks parked only ₹20,482 crore at a 6.49 per cent cut-off rate against a notified amount of ₹50,000 crore. This is better than the auction conducted in October which saw banks park just ₹ 5,354 crore against the notified amount of ₹50,000 crore.
The Reserve Bank of India has been nudging banks to park higher amounts.
“It is imperative that banks assess their actual liquidity requirements over the reserve maintenance cycle and bid accordingly in the auctions under the main 14-day VRRR operations of RBI,” RBI Governor Shaktikanta Das had said in October.
The previous rounds have also received tepid response. For example, in the auction held on August 25, the central bank received offers aggregating ₹22,419 crore against the notified amount of ₹ 1 lakh crore at the VRRR auction. In the VRRR auction on August 11, RBI received offers aggregating ₹34,139 crore against the notified amount of ₹ 1 lakh crore