Variable Rate Reverse Repo News Today : Breaking News, Live Updates & Top Stories | Vimarsana

The six-member Monetary Policy Committee of the RBI meets from April 3 to 5 to decide on interest rates.

Bond market circles said the auctions were driven by the need to keep the overnight money market rates closer to the repo rate even as the liquidity deficit in the banking system improved to a little over Rs one trillion from the record shortfall of Rs 3.46 trillion on January 24

An interesting observation in this MPC meeting is that while 5 MPC members voted for staying the course, 1 MPC member, Professor Jayanth R. Varma, actually voted to reduce the policy repo rate by 25 bps.

Banks submitted bids amounting to Rs 4.75 trillion, around 2.5 times of the notified amount of Rs 1.75 trillion, at the Variable Rate Reverse Repo (VRR) auction conducted by the Reserve Bank of India (RBI) on December 22, a day after the liquidity deficit in the banking system widened to Rs 2.5 trillion. In the most recent VRR auction held by the RBI on December 15, bids totaling 2.7 times the notified amount were received. Banks secured Rs 1 trillion at a weighted average rate of 6.63 per cent.

While the RBI’s default models do give the market a sense of safety as things stand today, experience tells us that banking crises generally follow the domino theory and spread like wildfire