The Reserve Bank of India (RBI) on Tuesday announced a two-day variable rate repo (VRR) auction worth Rs 50,000 crore, aimed at managing short-term liquidity conditions ahead of the central bank’s monetary policy review.The auction will be held on June 3 between 9:30 am and 10 am, while the reversal of funds will take place on June 5.“On review of the existing and emerging liquidity conditions, it has been decided to hold the Variable Rate Repo (VRR) auction on Wednesday, June 03, 2026,” the RBI said in a release.This announcement has been made at a time when surplus liquidity in the banking system has declined in recent times. System liquidity as of June 1 was a surplus of about Rs 85,411.44 crore, while as of May 31 there was a surplus of Rs 1.40 lakh crore.The central bank’s latest liquidity operations also showed subdued demand from banks.In the three-day VRR auction held on Tuesday, the RBI received bids worth Rs 17,445 crore against the notified amount of Rs 75,000 crore.According to an RBI release, the central bank accepted the entire amount and infused Rs 17,445 crore into the banking system at a cut-off and weighted average rate of 5.26 per cent.The latest liquidity operation comes as the Monetary Policy Committee (MPC) begins its three-day meeting on June 3, with the policy decision to be announced on June 5.