The Reserve Bank of India accepted Rs 23,905 crore in its Nov. 3 one-day variable rate reverse repo (VRRR) auction, less than half the amount on offer ahead of another operation scheduled for Nov. 4.
The RBI's Nov. 3 auction notice set the offer at Rs 50,000 crore, a plan covered in earlier EconoTimes coverage of the scheduled auction. Banks submitted Rs 23,905 crore (Rs 239.05 billion), and the central bank accepted all of it. The cut-off and weighted average rates were both 5.49%, according to the RBI's result.
When liquidity is abundant, the RBI uses these short-term auctions to draw cash from banks; participating lenders receive securities in exchange. The central bank's Nov. 2 money-market release showed net absorption of Rs 203,088.13 crore, including outstanding operations. The weighted average call-money rate that day was 5.50%.
The Economic Times reported that the weighted average call rate was 5.45% on Nov. 3. It also attributed the limited bidding to uneven distribution of surplus liquidity among banks.
A second one-day operation, with Rs 50,000 crore available, is slated for Nov. 4.
