RBI to conduct Rs 2 lakh crore VRRR auction on April 17

The Reserve Bank of India has announced a Rs 2 lakh crore seven-day VRRR auction on April 17 to manage surplus liquidity in the banking system. The move comes ahead of GST-related outflows that typically tighten liquidity. Governor Shaktikanta Das reiterated the RBI’s proactive stance on liquidity management.

Mumbai: The Reserve Bank of India (RBI) on Thursday announced it will conduct a Rs 2 lakh crore seven-day variable rate reverse repo (VRRR) auction on April 17 to manage surplus liquidity in the banking system. 

In a notification, the central bank said the decision comes in view of the prevailing transient surplus liquidity conditions.

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The auction will be held between 9:30 am and 10:00 am on Friday, with funds scheduled to be reversed on April 24.

The move is aimed at absorbing excess liquidity from the system, especially ahead of the usual outflows around the 20th of every month due to GST payments.

These outflows typically exert pressure on systemic liquidity and short-term money market rates.

By timing the reversal of funds after such outflows, the RBI seeks to ensure stability in overnight rates and maintain balanced liquidity conditions.

As of April 15, liquidity in the banking system is estimated to be in surplus of around Rs 5.22 lakh crore — indicating ample cash availability with banks.

The central bank had earlier conducted a similar seven-day VRRR auction on April 10, absorbing over Rs 2 lakh crore from the system.

Those funds are set to mature on April 17, coinciding with the fresh liquidity management operation.

RBI Governor Sanjay Malhotra had recently emphasised the central bank’s proactive approach towards liquidity management.

Speaking after the April monetary policy, he said the RBI will remain pre-emptive in ensuring adequate liquidity to support the productive requirements of the economy while maintaining stability in financial markets.

Meanwhile, last month, the central bank extended the enhanced export credit period of up to 450 days till June 30, 2026, to support exporters facing disruptions due to the ongoing West Asia crisis.

“Due to ongoing geopolitical uncertainties and logistical disruptions, Reserve Bank of India has been receiving representations from various stakeholders regarding challenges in adhering to the timelines for realisation of export proceeds,” the central bank said.