RBI To Hold Rs 25,000 Crore Overnight VRR Auction Today

The Reserve Bank of India (RBI) will conduct an overnight variable rate repo (VRR) auction of Rs 25,000 crore on July 8, 2026, as it continues to manage liquidity conditions in the banking system. The funds borrowed by banks through the auction will be reversed on July 9.

The RBI has said that the decision was taken after reviewing the current and evolving liquidity situation. A VRR auction allows banks to borrow short-term funds from RBI by bidding for the interest rate they are willing to pay. It is one of the tools used by the central bank to address temporary liquidity requirements in the banking system.

Banking System Continues To See Surplus Liquidity

Despite the announcement of the fresh auction, liquidity in the banking system continues to remain in surplus. According to data from the RBI, the banking system recorded a liquidity surplus of around Rs 1.19 lakh crore as on July 6.

The latest move comes a day after banks showed limited interest in a similar overnight VRR auction. On July 7, RBI had offered Rs 50,000 crore through an overnight auction but received bids worth Rs 1,135 crore only

The central bank accepted the entire amount at a cut-off rate and weighted average rate of 5.26 per cent.

Market participants have attributed the weak response to the comfortable liquidity position in the banking system, which reduced banks' need to borrow additional funds from RBI.

RBI Continues Short-Term Liquidity Operations

The RBI has been using VRR auctions regularly in recent weeks to manage short-term liquidity. Since June, it has infused more than Rs 6 lakh crore of temporary liquidity through VRR auctions with maturities ranging from overnight to seven days.

These auctions are purposed to meet temporary funding needs without making permanent changes to liquidity conditions. RBI decides the amount offered and the maturity period after assessing liquidity in the financial system.