RBI to conduct 2-day VRRR auction to drain Rs 1 trillion in liquidity

RBI is set to drain ₹1 trillion via a 2-day VRRR (Variable Rate Reverse Repo) auction in July 2025. This significant liquidity management operation by the Reserve Bank of India aims to absorb excess money from the banking system. VRRR auctions are a tool used by the RBI to manage short-term liquidity, control inflation, and guide interest rates. Draining such a large sum indicates that the RBI perceives excess liquidity in the system, and this action is intended to temper inflationary pressures and maintain financial stability.