Central Bank Absorbs Excess Cash via VRRR and OMO Operations This September

In a coordinated liquidity‑management drive, the Reserve Bank of India used both Variable Rate Reverse Repo (VRRR) auctions and open‑market operations (OMO) to withdraw surplus funds from the banking system.

The VRRR auction held on September 15 saw bids amounting to ₹3,93,352 crore against a targeted ceiling of ₹5 lakh crore, with the RBI applying a 5.24 per cent cut‑off rate.

Earlier in the month, a one‑day VRRR auction had already drawn more than ₹3.53 lakh crore, absorbing over 70 per cent of the announced amount.

Complementing these reverse‑repo measures, the RBI scheduled a three‑phase OMO to sell government securities worth a total of ₹1 lakh crore. The first ₹50,000 crore tranche is slated for September 17, followed by two ₹25,000 crore sales on September 21 and September 28.

These combined actions are designed to keep overnight money‑market rates in line with the policy repo rate while easing the excess cash of approximately ₹10.73 lakh crore that has built up in the system.