By ET BureauLast Updated: Oct 20, 2026, 01:17:00 AM IST

Synopsis

On Monday, the RBI announced a Rs 1-lakh-crore variable rate repo (VRR) auction for the first time since late July after the weighted average call rate (WACR) at 5.67% on Monday, or 17 basis points higher than the repo rate of 5.50%. The central bank will conduct another VRR for Rs 50,000 crore on Wednesday.

Mumbai: For weeks, India's central bank had its task-list full, draining excess liquidity after an overwhelming diaspora response to forex-inflow programs. Now, as the festive season slots into top gear, the Reserve Bank of India operationalised its first liquidity infusion program in three months after the overnight call rates shot past the policy benchmark.

On Monday, the RBI announced a Rs 1-lakh-crore variable rate repo (VRR) auction for the first time since late July after the weighted average call rate (WACR) at 5.67% on Monday, or 17 basis points higher than the repo rate of 5.50%. The central bank will conduct another VRR for Rs 50,000 crore on Wednesday.

RBI's VRR operation attracted bids of Rs 1.50 lakh crore while the banking system liquidity stood at a surplus of Rs 1.99 lakh crore as of October 16.

The liquidity infusion will also help banks manage funds amid the monthly tax outflow after tightening the daily cash reserve requirement which came into effect on October 16, traders said. "It doesn't matter what the stance of the monetary policy is, but the job of liquidity management is to keep the overnight rate at repo rate. Currently, the WACR is near the MSF (marginal standing facility)," said Gaura Sengupta, chief economist, IDFC First Bank.

The WACR inched higher after the RBI tightened the daily cash reserve requirement. It was at the MSF for the first time this year on Friday. The MSF forms the upper ceiling and SDF (standing deposit facility) forms the lower floor of the RBI's Liquidity Adjustment Facility corridor, with the policy repo rate sitting in the middle.

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