RBI VRR Auction: Banks Bid ₹1.62 Lakh Crore for ₹50,000 Crore; Three-Day Repo Set for Friday

Banks asked RBI for more than three times the cash on offer on Thursday morning. RBI’s overnight variable rate repo (VRR auction) of ₹50,000 crore on 22 October 2026 drew bids of ₹1,62,354 crore, up from ₹93,241 crore a day earlier. RBI has now announced a three-day VRR auction of ₹50,000 crore for Friday, 23 October, to carry banks through the weekend.

Thursday’s VRR auction result

The cut-off rate rose by two basis points as competition for funds increased. Only 3.2% of bids at the cut-off rate were filled. Both rates sit just above the 5.50% repo rate.

Reading the auction numbers

In a variable rate auction, each bank quotes an amount and a rate. RBI fills the highest bids first until the notified ₹50,000 crore is used up. The rate of the last bid accepted is the cut-off. “Partial allotment of 3.2%” means banks that bid exactly at the cut-off received only 3.2% of what they asked for at that rate; bids above it were filled in full, and bids below it got nothing.

So on Thursday, roughly ₹1,12,000 crore of requests went unmet, on our calculation from bids minus allotment. Those banks had to borrow elsewhere or use the costlier MSF window.

RBI is also absorbing money at the other end: a 29-day variable rate reverse repo of ₹37,055 crore from 8 October is outstanding until 6 November, at 5.49%.

Friday’s three-day VRR auction

The tenor spans the weekend.

A mixed liquidity picture

RBI’s money market data for Wednesday, 21 October, show two things happening at once:

• Banks borrowed ₹50,007 crore through the overnight VRR and ₹2,613 crore through the Marginal Standing Facility at 5.75%, RBI’s emergency window.
• At the same time, banks parked ₹1,25,597 crore in the Standing Deposit Facility at 5.25%.

Counting outstanding operations, including the ₹1,00,014 crore seven-day VRR from 19 October, RBI calculated net liquidity at an absorption of just ₹541.95 crore: close to neutral overall. Call money traded at a weighted 5.65%. The usual reading of such a split, and it is our general reading rather than RBI’s, is that cash is unevenly spread: some banks are short and borrowing, while others have surplus they park with RBI. Our SDF and MSF explainer covers these windows.

Banks’ cash balances with RBI were ₹8,46,959 crore on 21 October against an average daily requirement of ₹8,33,309 crore for the fortnight, about ₹13,650 crore above on our calculation. Our CRR explainer explains the daily minimum rule.

Why this matters to you

Overnight rates feed into short-term deposit and loan pricing, treasury bill yields and liquid mutual fund returns. Firm money-market rates after RBI’s hike to 5.50% mean short-term FD rates are unlikely to fall soon. Our earlier liquidity report has this week’s seven-day auction and the T-bill result.

FAQs

What is a VRR auction?

A variable rate repo auction in which banks bid for short-term RBI funds against government securities, at rates they quote above the repo rate.

Why a three-day auction?

It covers Friday to Monday, so the money is reversed on the next working day, 26 October.

Takeaway: Thursday’s VRR auction was 3.25 times covered and the cut-off rose to 5.54%. RBI’s three-day ₹50,000 crore auction on Friday will carry banks through the weekend; overall liquidity is near neutral but unevenly spread.