Mumbai: The Reserve Bank of India on Monday said it will be conducting an overnight variable rate repo auction under liquidity adjustment facility (LAF) for an amount of Rs 75,000 crore. According to a report, this was done to augment the liquidity shortfall in the economy.
The date of reversal is on January 25, 2022, the central bank said in a release.
On January 20, the RBI had conducted an overnight variable rate repo (VRR) auction of Rs 50,000 crore.
The central bank had said it will continue to rebalance liquidity conditions in a non-disruptive manner while maintaining adequate liquidity to meet the needs of the productive sectors of the economy.
The Reserve Bank has been rebalancing the surplus liquidity in the system by shifting it out of the fixed-rate overnight reverse repo window into the variable rate reverse repo (VRRR) auctions of longer maturity. Overall, this rebalancing has proceeded on a pre-announced glidepath and has evolved satisfactorily.
For the unversed, RBI borrows money from the banks at the Reverse Repo rate. It borrows money in two parts, one at a fixed rate of interest and the other at a variable rate of interest. The RBI Governor Shaktikanta Das had earlier said that for the time being, RBI would focus more on the variable rate of interest for a maturity of 14 days.