RBI may resort to overnight VRRR to manage liquidity: Analysts
The Reserve Bank of India (RBI) may opt for variable rate reverse repo (VRRR) auctions for one day to absorb liquidity, according to some bankers and analysts, amid reluctance from banks to park funds for any longer. The central bank's recent offers to withdraw money for periods of up to 14 days received limited interest from the market even though surplus liquidity has been over INR2tn. Despite this, traders do not anticipate the RBI opting for a hike in cash reserve ratio (CRR), open market sale of bonds or issuance of shorter duration bills under the market stabilisation scheme (MSS).
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