RBI Injects ₹48,014 Crore into Banking System By VRR Auction

The Reserve Bank of India (RBI) has injected the amount of the ₹48,014 crore into the banking system. This injection come through a 7 day Variable Rate Repo (VRR) auction. This move comes at a time when the liquidity conditions have tighten due to advance tax payments. Despite offering the ₹1.50 lakh crore banks have borrowed a smaller amount and it is reflecting cautious demand.

RBI Liquidity Injection via VRR Auction Explained

The RBI liquidity injection through the VRR auction is the short term measure to provide funds to banks.

In this system of the RBI the banks can borrow money from RBI at variable interest rates for a fixed period.

In this auction total funds were infused at a cut off and weighted average rate of 5.26%.

This mechanism helps banks manage temporary liquidity shortage.

Why Banking Liquidity Tightened Recently

Banking liquidity in India has been seen as the sharp decline due to advance tax payments by corporates.

These payments will reduce the cash available with banks and also tightening liquidity conditions.

Also the upcoming Goods and Services Tax (GST) payments are expected to further drain liquidity.

This situation requires timely intervention by RBI to maintain balance and prevent disruptions in financial markets.

Current Liquidity Situation in India

The surplus liquidity in the indian banking system has been dropped significantly within a short period.

As of March 16 2026 total liquidity stood at around ₹75,483.63 crore.

This is a sharp fall compared to ₹2.08 lakh crore recorded on March 15 before advance tax outflows.

RBI’s Durable Liquidity Support Through OMO

Apart from short term VRR auctions also the RBI has been inject durable liquidity through Open Market Operations (OMO).

Since the start of the January 2026 RBI has infused ₹3.50 lakh crore into the system.

OMO involves the purchase of government securities from the market, which increases money supply.

This ensures long-term liquidity support and stability in the financial system.

Question

Q. RBI injected liquidity through which instrument recently?

A) Reverse Repo
B) VRR Auction
C) CRR
D) SLR