The Reserve Bank of India (RBI) on Friday conducted two variable rate repo (VRR) auctions for a notified sum of Rs 2.15 lakh crore (trillion). VRR auctions are done to inject liquidity into the system.

Two overnight variable rate reverse repo (VRRR) auctions were conducted on February 6 and February 7. In a VRRR auction, the RBI sucks out liquidity from the system.

The RBI conducted a three-day VRR auction and a 14-day VRR auction on Friday, with a mixed response.

In the 14-day auction, the RBI received bids of Rs 2.42 lakh crore, while it accepted Rs 1.75 lakh crore, which is the notified amount, at a cut-off rate of 6.71 per cent.

In the three-day auction, against the notified amount of Rs 40,000 crore, it received bids for Rs 35,120 crore, which was accepted at a cut-off rate of 6.51 per cent.

While liquidity in the banking system continue to remain in a deficit mode, the shortfall stood at Rs 195,561 crore on February 8 compared with a deficit of Rs 153,035 crore in the previous day.

Meanwhile, the weighted average call money rate stood at 6.73 per cent according to CCIL data. Market observers say the RBI wants money market rates to be around the repo rate which stands at 6.50 per cent.

On Thursday, the monetary policy committee (MPC) had retained the repo rate for the sixth consecutive time even as it did not offer any timeline on when a cut would start.

After the MPC meet, RBI governor Shaktikanta Das said liquidity management had remained nimble and flexible through two-way operations —both repo and reverse repo.