The Reserve Bank of India on Monday (19 October) injected Rs 1,00,000 crore into the banking system through a seven-day Variable Rate Repo (VRR) auction — yaani Rs 1 lakh crore, or Rs 1 trillion — its first liquidity-infusion auction since 29 July 2026, as surplus liquidity in the system shrank sharply.

Banks bid Rs 1,50,735 crore against the notified Rs 1 lakh crore, and the RBI allotted Rs 1,00,014 crore at a weighted average rate of 5.52 per cent (cut-off 5.51 per cent). The weighted average call rate had risen to 5.67 per cent, 17 basis points above the 5.50 per cent policy repo rate.

System surplus liquidity fell to Rs 1,85,873 crore on 18 October, down from average daily net absorption under the Liquidity Adjustment Facility (LAF) of Rs 1.2 lakh crore in July, Rs 5.8 lakh crore in August and Rs 7.8 lakh crore in September.

The RBI had been in absorption mode since 6 August, running Variable Rate Reverse Repo (VRRR) auctions to drain FCNR(B) swap inflows. The seven-day funds from Monday's auction reverse on 26 October, and a further Rs 50,000 crore VRR operation is scheduled for 21 October.

Analysts cited in reports said a move from surplus toward a small deficit should help transmit the recent 25 basis point repo rate hike to deposit and lending rates.

Sources: The Hindu BusinessLine; Reserve Bank of India auction announcement/result (Press Release 2026-2027/1345); corroborating market reports.