Kolkata: The Reserve Bank of India will hold a 26-day variable rate reverse repo auction on Friday with a target to drain out Rs 5 lakh crore from the inter-bank market which is flush with excess liquidity.
Announcing the auction Thursday, the regulator said that participants in the auction will have an option to withdraw the amount lent.
The RBI is holding longer-term VRRR to absorb durable liquidity, besides holding overnight VRRR to manage the excess flow of funds, on account of the overseas inflows through the special dollar-mobilisation scheme.
As on Thursday, the inter-bank had a surplus liquidity of Rs 10.5 lakh crore, RBI data showed.
In the previous long term 30-day VRRR auction held Monday, RBI could drain out only Rs 2.59 lakh crore against a target of Rs 7 lakh crore, which forced the central bank to hold an overnight auction for Rs 5 lakh crore.
