RBI to inject 1 lakh crore rupees as overnight call rates climb
The Reserve Bank of India will run a 1 lakh crore VRR auction after overnight rates rose above the 5.50% repo rate, per Moody's.
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what happened
According to Moody's, the Reserve Bank of India announced a 1 lakh crore variable rate repo (VRR) auction, its first since late July. The move follows a rise in the weighted average call rate (WACR) to 5.67% on Monday, 17 basis points above the 5.50% repo rate.
The central bank will hold another VRR of 50,000 crore on Wednesday. The first auction drew bids of 1.5 lakh crore, while banking system liquidity was in a surplus of 1.99 lakh crore as of October 16. Banks also face monthly tax outflows after the daily cash reserve requirement was tightened.
Earlier this year the WACR touched the marginal standing facility (MSF) rate for the first time on Friday, the upper boundary of the liquidity corridor.
why it matters
The episode shows how quickly liquidity in India can tighten around tax dates and festive demand. For the rupee and Indian government bonds, it signals that the central bank is ready to steer short-term rates without changing the policy repo rate.
market impact
Indian bonds and rupee: short-term rates under RBI control, pressure in the money market eases
tags
instruments
sources
- RBI Injects 1 L cr as Cash Gets a Bit Tight — Moody's, 20 October 2026 at 04:12 UTC
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