MUMBAI: With the system level liquidity remaining tight, the Reserve Bank on Thursday said it will conduct a seven-day variable rate repo (VRR) auction for a notified amount of Rs 1 lakh crore under LAF (liquidity adjustment facility) on January 5.
On reviewing current and evolving liquidity conditions, it has been decided to conduct a variable rate repo auction. The auction will have a 7-day tenor that's January 12, 2024, the monetary authority said in a statement.
The apex bank first introduced the idea of VRR in the monetary policy statement on December 8, 2021, as a means to infuse liquidity into the system.
The first such auction was held for Rs 50,000 crore on January 20, 2022. And since then, the Reserve Bank has been rebalancing the surplus liquidity in the system by shifting it out of the fixed rate overnight reverse repo window into the variable rate reverse repo (VRR) auctions of longer maturity.
The VRR auction is conducted on the CBS (e-Kuber) platform, and the minimum bid amount for the auction would be Rs 1 crore and multiples thereof.