RBI to discontinue daily VRR auctions from June 11

The Reserve Bank of India (RBI) on Monday said it will discontinue its daily Variable Rate Repo (VRR) auctions from June 11, 2025, following a review of the prevailing liquidity conditions in the banking system.

The central bank had introduced the daily VRR facility on January 16, 2025, as a temporary measure to manage short-term liquidity. The auctions were conducted on all working days in Mumbai between 10:00 am and 10:30 am. The reversal of funds was scheduled for the next working day.

"On a review of current and evolving liquidity conditions, it has been decided that the daily VRR auctions… will be discontinued with effect from June 11, 2025," the RBI said in a press release.

The facility allowed banks and eligible participants, including Standalone Primary Dealers, to access liquidity from the central bank against eligible collateral.

The amount for the auctions was determined daily based on the Reserve Bank’s assessment of liquidity conditions. The first such auction had been held for ₹50,000 crore.

For the final daily VRR auction on June 10, 2025, the notified amount has been set at ₹25,000 crore.

The operational framework for the VRR auctions was in line with the existing Liquidity Adjustment Facility (LAF) guidelines, with features such as a minimum bid amount of ₹1 crore, interest-based bidding, and pro-rata allotment at the cut-off rate.