RBI gets good response from banks at the 6-day VRRR auction for sucking out ₹1.50 lakh crore

The variable rate reverse repo (VRRR) auction of six-days tenor conducted on Friday to suck out liquidity amounting to ₹1.50 lakh crore received a good response, with banks deploying surplus funds aggregating ₹1,38,366 crore. The central bank accepted all the offers at a weighted average rate of 5.49 per cent. The banking system currently has surplus liquidity of about ₹2.37 lakh crore. This is likely to increase further as the RBI is set to reduce the cash reserve ratio (CRR) in four equal tranches of 25 basis points each with effect from the fortnights beginning September 6, October 4, November 1 and November 29, 2025. The cut in CRR (from 4 per cent to 3 per cent) would release primary liquidity of about ₹2.5 lakh crore to the banking system by December 2025. Monetary Policy Committee (MPC) member and Economist Saugata Bhattacharya, in his comments at the committee’s last meeting, noted that average system liquidity has been in ₹3 lakh crore surplus since the June 2025 MPC meeting, and the pre-emptive guidance of a 100 basis points cut in the CRR starting September is expected to keep liquidity in surplus. Further, financial conditions, as reflected in RBI data, remain easy. Meanwhile, the RBI has announced that it will conduct a three-day VRRR auction amounting to ₹50,000 crore on September 1. Published on August 29, 2025