Banks park less than notified amount at VRRR auction for 3 days on the trot

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Banks have parked much lower than the notified amount at the Reserve Bank of India for three days on the trot since the beginning of July 2024.

This indicates that while RBI is trying to ensure that surplus liquidity is absorbed from the banking system in keeping with its “withdrawal of accommodation” monetary policy stance, banks do not have a great amount of surplus to park.

At the two-day VRRR auction of ₹50,000 crore on Wednesday, Banks’ deploying ₹25,145 crore. The Central Bank accepted the funds at a weighted average rate (WAR) of 6.49 per cent.

At the three-day VRRR auction of ₹75,000 crore conducted on July 2nd, Banks placed funds amounting to ₹38,227 crore. The Central Bank accepted the funds at a WAR of 6.49 per cent.

At the four-day VRRR auction of ₹75,000 crore conducted on July 1st, RBI received and accepted funds from Banks amounting to ₹4,200 crore at a WAR of 6.49 per cent.

Monetary policy stance

“Overall system liquidity is a bit positive as government spending is happening. So, the RBI is conducting VRRR auction. This is also in keeping with the monetary policy stance.

“By doing so, it is trying to ensure that the weighted average call rate (WACR) stays at or above 6.50 per cent,” said Gopal Tripathi, President and Head, Treasury and Capital Markets at Jana Small Finance Bank.