RBI Announces ₹7 Lakh Crore Liquidity-Absorption Operation The Reserve Bank of India (RBI) is preparing a major 30-day variable-rate reverse repo (VRRR) auction of ₹7 lakh crore on September 7, as it attempts to absorb excess liquidity from India's banking system. Banking-system liquidity surplus had reached approximately ₹10.3 lakh crore as of September 3, creating a challenge for the RBI in keeping short-term interest rates aligned with its monetary-policy framework. The new VRRR auction includes an early-exit option, which could encourage banks to participate because they would not necessarily have to lock their funds for the entire 30-day period. The move is important for financial markets because excessive liquidity can push money-market rates lower and influence banks' lending and investment decisions. Investors will therefore watch Monday's auction closely for indications of how aggressively banks absorb the available liquidity.

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