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RBI withdraws ₹1 lakh crore from banking system through VRRR auction to tackle surplus liquidity

July 05, 2025

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The Political and Business Daily

THE Reserve Bank of India (RBI) on Friday withdrew Rs 1,00,010 crore from the banking system through a seven-day variable rate reverse repo (VRRR) auction.

RBI withdraws ₹1 lakh crore from banking system through VRRR auction to tackle surplus liquidity

The move is aimed at reducing the excess liquidity currently present in the banking system. According to a statement by the RBI, it received bids worth Rs 1,70,880 crore during the auction.

“Out of this, the central bank accepted Rs 1,00,010 crore at a cutoff rate of 5.47 percent,” the Central Bank said in its statement.

This step is expected to reduce the surplus liquidity and could lead to a rise in short-term overnight rates.

As per the RBI's latest data, the banking system had a liquidity surplus of around Rs 4.04 lakh crore as of July 3.

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