RBI absorbs ₹2.9 lakh crore to suck excess liquidity

The Reserve Bank of India (RBI) absorbed nearly ₹2.9 lakh crore from the banking system through overnight Variable Rate Reverse Repo (VRRR) auctions on September 16, as part of its efforts to suck excess liquidity.The RBI conducted the liquidity-absorption operation in two tranches. The first auction, targeting ₹2,50,025 crore, received bids worth ₹3,17,088 crore. The central bank accepted ₹2.5 lakh crore at a cut-off rate of 5.4%, which was also the weighted average rate.In the second auction, the RBI had set a target of ₹1 lakh crore but received bids worth only ₹40,302 crore. The entire amount was accepted at a cut-off rate of 5.4%.VRRR is a monetary-policy tool used by the RBI to absorb surplus liquidity from the banking system. Banks park their excess funds with the central bank for a specified period in exchange for interest.The latest operation comes against the backdrop of surplus liquidity in the banking system, which has crossed ₹9 lakh crore. Liquidity conditions are expected to remain comfortable and could rise further following anticipated inflows through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. Published - September 16, 2026 05:30 pm IST