RBI accepts ₹1 lakh crore in seven-day repo auction as bank liquidity surplus narrows
Banks bid for more than the amount on offer in the Reserve Bank of India’s October 19 operation, BusinessLine reported, as surplus funds in the banking system declined.
The Reserve Bank of India conducted a seven-day variable-rate repo auction on October 19, 2026, offering ₹1 lakh crore to banks as the banking system’s surplus liquidity declined. Banks bid for ₹1,50,735 crore, and the RBI accepted ₹1,00,014 crore at a weighted average rate of 5.52%, according to The Hindu BusinessLine. The operation supplied short-term funds to banks seeking them.
What the RBI offered banks on October 19
In its October 19 announcement, the RBI set the auction window at 9:30 a.m. to 10 a.m. and scheduled the seven-day funds to be repaid on October 26. It said a review of current and near-term liquidity conditions prompted the operation. The auction was conducted under the central bank’s liquidity adjustment facility.
The bids reported by BusinessLine exceeded the RBI’s notified amount by ₹50,735 crore. Its reported accepted amount was ₹14 crore above the notified figure. Those figures describe the auction result reported by BusinessLine; the RBI announcement set out the terms before bidding began.
Why the operation marked a change in liquidity management
BusinessLine reported that the RBI last held a variable-rate repo auction to supply funds on July 29. From August 6, it had instead used variable-rate reverse repo auctions to absorb surplus funds. The outlet linked that surplus to banks’ foreign-currency non-resident deposits under an RBI swap window that ran from June 8 to August 31.
The scale of that earlier surplus appears in BusinessLine’s figures for average daily net absorption under the liquidity adjustment facility: ₹1.2 lakh crore in July, ₹5.8 lakh crore in August and ₹7.8 lakh crore in September. Citing the latest RBI data, it put surplus banking-system liquidity at ₹1,85,873 crore on October 18.
The shift matters to banks because a repo auction lets them obtain temporary funds from the RBI, while a reverse repo operation absorbs funds from the system. BusinessLine said a gradual move from surplus liquidity toward a small deficit could help transmit the recent 25-basis-point increase in the RBI’s repo rate to deposit and lending rates.
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Sources and context
- RBI to conduct 7-day Variable Rate Repo (VRR) auction under LAF on October 19, 2026Reserve Bank of India
- RBI conducts ₹1 lakh cr Variable Rate Repo auction to push liquidity into banking systemThe Hindu BusinessLine
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.