In two RBI variable rate reverse repo (VRRR) auction comparisons reported on 8 and 9 October 2026, banks bid substantially more for shorter operations than for longer ones. The figures show stronger participation in those shorter-tenor auctions, even as the banking system had a reported liquidity surplus; they do not establish why individual banks chose one maturity over another.
What the auction figures show
A VRRR auction lets participants bid to place funds with the Reserve Bank of India (RBI) at variable rates. The RBI uses the operation to absorb surplus liquidity. Tenor means how long the funds are placed. The two same-day comparisons below show the reported difference in bids by tenor.
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9 October: 10-day versus 3-day
Press Trust of India (PTI), in a report carried by Moneycontrol, said both auctions had a notified amount of ₹1.50 lakh crore. The 10-day auction drew bids of ₹18,170 crore, while the 3-day auction drew ₹1,39,847 crore.
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|---|---|---|---|
| 9 October 2026, 10-day | ₹1.50 lakh crore | ₹18,170 crore | All bids accepted; 5.49% cut-off and weighted-average rate |
| 9 October 2026, 3-day | ₹1.50 lakh crore | ₹1,39,847 crore | Not stated in the cited Moneycontrol report |
8 October: 29-day versus overnight
PTI, in a report carried by ETBFSI, reported ₹79,655 crore in bids for the 29-day auction and ₹1,60,664 crore for the overnight auction. Each had ₹2 lakh crore notified; both were accepted at 5.49%, according to the report.
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| Auction date and tenor | Notified amount | Bids received | Accepted amount and rate |
|---|---|---|---|
| 8 October 2026, 29-day | ₹2 lakh crore | ₹79,655 crore | ₹79,655 crore; 5.49% |
| 8 October 2026, overnight | ₹2 lakh crore | ₹1,60,664 crore | ₹1,60,664 crore; 5.49% |
Why the response looked tepid despite surplus liquidity
The 9 October PTI report put system liquidity surplus at about ₹3.88 lakh crore as of 8 October. That system-wide estimate does not describe the cash position or expected needs of any one bank. A surplus across the banking system can therefore coexist with relatively low bids for a particular longer-tenor operation.
PTI attributed the surplus partly to FCNR(B) deposit mobilisation followed by RBI swaps that provided rupee liquidity, and partly to month-end government spending, including salaries and pensions. The report did not quantify each factor’s contribution. It described the auctions’ purpose as absorbing excess liquidity and aligning overnight money-market rates with the repo rate.
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PTI also reported that average daily net absorption under the Liquidity Adjustment Facility rose from ₹1.2 lakh crore in July 2026 to ₹5.8 lakh crore in August and ₹7.8 lakh crore in September. It said the RBI had conducted 55 VRRR auctions, including two term VRRR auctions, since the August policy. These are figures reported by PTI, rather than independently verified here against the underlying RBI series.
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What can—and cannot—be inferred about banks’ maturity choices
In both reported pairs, the shorter operation attracted more bids than the longer one. That supports describing participation in these specific auctions as stronger for shorter maturities. It does not prove that banks generally prefer short maturities, or identify why participants made their bids.
The reports provide no bank-level bids or interviews establishing whether a bank’s own liquidity forecast, expectations about market rates, or another consideration drove its choice. Governor Sanjay Malhotra was reported as saying on 6 October that the surplus would be absorbed during the financial year through currency leakage, RBI liquidity operations and banks’ reserve requirements; that is reported speech, not a verified verbatim quotation.
The auction figures are dated event results, not a standing pattern. The cited reporting is the basis for the October comparisons; the official RBI search result available for this topic concerned a September 30-day auction, not these October figures. The numbers should be checked against the RBI’s original auction-result releases if those releases become available.
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