{
  "id": 12881413,
  "title": "RBI bid to drain surplus liquidity and improve rate transmission sees muted response",
  "url": "https://urgent.news/2026/10/08/rbi-bid-to-drain-surplus-liquidity-and-improve-rate-transmission-sees",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-08T13:33:50.000Z",
  "source": {
    "name": "The Economic Times - Economy",
    "slug": "the-economic-times-economy",
    "url": "https://economictimes.indiatimes.com/news/economy/policy/rbi-bid-to-drain-surplus-liquidity-and-improve-rate-transmission-sees-muted-response/articleshow/134792121.cms"
  },
  "original_language": "en",
  "account": "The Reserve Bank of India's attempt to reduce surplus liquidity and enhance the impact of its first rate hike in nearly four years on Thursday did not yield a strong response.The central bank expected banks to deposit Rs 2 lakh crore in its 29-day variable rate reverse repo (VRRR) auction, but received just Rs 79,655 crore.Banks were allowed to withdraw funds with a two-day notice, which may have contributed to the low participation.The RBI aimed to use various liquidity-management tools to facilitate the transmission of the rate increase.However, some banks opted not to participate in the longer-term VRRR due to the availability of the daily VRRR option.The RBI absorbed Rs 1.61 lakh crore through the daily VRRR, which falls short of the planned Rs 2 lakh crore.The central bank expects surplus liquidity to drain by the end of the fiscal year and expects robust credit off-take, aided by the festive season.Eventually, the inter-bank market held Rs 4.24 lakh crore of surplus liquidity at the end of October 7.",
  "summary": "Banks parked just Rs 79,655 crore in the central bank’s 29-day variable rate reverse repo (VRRR) auction, less than half the Rs 2 lakh crore absorption planned in the offer. Draining liquidity is considered crucial for quicker and effective transmission of increases in policy rates.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}