RBI to conduct 26-day VRRR auction to absorb Rs 5 lakh crore surplus liquidity

The Reserve Bank of India will conduct a 26-day Variable Rate Reverse Repo (VRRR) auction on Friday to absorb Rs 5 lakh crore in surplus liquidity from the inter-bank market. The extended operation is designed to manage persistent liquidity by allowing participants to reclaim lent amounts.

The RBI's move is a direct response to surplus liquidity conditions caused by foreign investments. The auction represents a proactive step to maintain equilibrium in money markets and ensure orderly credit flow in the banking system.