An overwhelming response was received by the Reserve Bank of India (RBI) on Friday at its 14-day variable rate reverse repo auction. This auction got conducted under the revised Liquidity Management Framework, with many banks tendering bids for 1.5 times the notified amount of ₹2-lakh crore.

This was the first auction to be conducted after the temporary suspension of the aforementioned framework decided by the RBI due to the pandemic, issued on February 6, 2020, and is part of the central bank’s measures to resume normal liquidity management operations. Offers for parking liquidity aggregating ₹3,05,816 crore were received by the RBI at the auction, which accepted offers, aggregating ₹2,00,009 crore, having the cut-off rate and weighted average rate to 3.55% and 3.46%, respectively.

The RBI has absorbed liquidity aggregating ₹6,70,642 crore at the one-day reverse repo on Thursday with the reverse repo rate of 3.35% thus the surplus liquidity present in the banking system is now underscored.