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Liquidity woes prompt RBI to hold largest VRR auction in a year
Financial Express Kochi
|January 11, 2025
AS THE LIQUIDITY deficit deepens further, the Reserve Bank of India (RBI) on Friday conducted its largest variable rate repo (VRR) auction in nearly a year with a notified amount of ₹2.25 lakh crore.
Cash-starved banks submitted bids totalling ₹2.77 lakh crore, prompting the RBI to conduct a second VRR auction worth ₹50,000 crore. This follow-up auction, too, received a robust response, with banks placing bids of around ₹75,000 crore.
The liquidity shortfall, which was around ₹1.4 lakh crore in the first week of January, crossed the ₹2-lakh-crore mark on Thursday. Banks have requested the RBI to consider several liquidity-easing measures, including a further cut in the cash reserve ratio, amid a surge in borrowing costs, according to sources.
This story is from the January 11, 2025 edition of Financial Express Kochi.
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