After reviewing the current and evolving liquidity conditions in the Indian banking system, the RBI has decided to conduct a two-day Variable Rate Repo (VRR) auction on June 29, 2026. This step will be for an amount of ₹75,000 crore, with the reversal scheduled for July 1, 2026.
Highlights
- RBI will conduct a two-day VRR auction of ₹75,000 crore under the Liquidity Adjustment Facility on June 29, 2026.
- The auction will be held from 9:30 AM to 10:00 AM, with the reversal scheduled for July 1, 2026.
- The auction will be conducted as per the guidelines of the press release dated January 20, 2022, ensuring stability in market operations.
This article was translated from the original. Read the original version by our correspondent here.
Auction Plan for Liquidity Management
According to the Reserve Bank of India press release, this VRR auction will be held on Monday, June 29, 2026, under the Liquidity Adjustment Facility (LAF). The auction will be open from 9:30 AM to 10:00 AM and will have a two-day tenor.The notified amount is set at ₹75,000 crore. The RBI stated that the objective of this operation is to provide short-term funds to the system in line with the prevailing and evolving liquidity conditions.
Market Operations and Operational Guidelines
The central bank clarified that the operational guidelines for this auction will remain the same as those in the Reserve Bank press release 2021-2022/1572 dated January 20, 2022. This will ensure continuity for market participants in terms of process, eligibility, and bidding mechanism.The reversal of the amount allotted in this auction will take place on Wednesday, July 1, 2026. The announcement is signed by Ajit Prasad, Deputy General Manager, Communications, and has been issued as press release number 2026-2027/549.
Our previous report discussed the tensions arising in the Indian stock market between high valuations and high capital costs, where the expected return threshold rises due to an approximately 7% risk-free rate and a 5–6% risk premium. We also noted that the gap between prices and real income potential may widen due to limited options for domestic investors and the global mobility of foreign capital, which could put pressure on the market and external balance going forward.
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