Reserve Bank of India to undertake a one-lakh crore Rupee Overnight Variable Rate Reverse Repo Auction on the upcoming Monday
The Reserve Bank of India (RBI) has announced that it will conduct an overnight Variable Rate Repo (VRR) auction on Monday, with a total amount of Rs 1 lakh crore. This move comes as part of the RBI's ongoing efforts to manage systemic liquidity, which has been falling due to tax outflows.
The auction is scheduled to take place between 9.30 a.m. and 10.00 a.m. on Monday. The reversal for the auction will happen on Tuesday. It's worth noting that the RBI has been conducting VRR auctions since September 16, following the decline in liquidity.
In a separate event on Friday, the RBI conducted two VRR auctions with tenures of six days and three days. In the six-day VRR auction, participants bid Rs 59,967 crore against the notified amount of Rs 1 lakh crore. In the three-day auction, bids worth Rs 390 crore were received against the notified amount of Rs 50,000 crore.
Prior to these auctions, the banking system's liquidity stood at Rs 72,774 crore on September 18, a significant drop from Rs 1.90 lakh crore on September 15 and Rs 63,745 crore on September 17.
In a recent statement, the RBI did not provide details about the reasons for these auctions. However, the RBI Governor has suggested the need to go beyond the USD-INR corridor, indicating a possible shift in monetary policy strategies.
Meanwhile, in other financial news, shares of Infosys, Cognizant, and Wipro have been tumbling due to Trump's $100,000 H-1B visa fee plan. In a positive development, PhonePe has secured the final nod from the RBI to operate as an online payment aggregator.
Lastly, it is planned to start routing CSS funds via the RBI from November, although the specific timing has not been specified yet. The first 25-bps CRR cut takes effect today.
As the RBI continues to navigate the challenges posed by the current economic climate, these moves aim to maintain stability in the financial system and support economic growth.
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