Result of the Overnight Variable Rate Reverse Repo (VRRR) auction held on October 06, 2026
Distilled Policy Brief
- The Reserve Bank of India conducted an overnight Variable Rate Reverse Repo auction on October 06, 2026, with a notified amount of 2,50,000 crore rupees, accepting offers worth 1,92,357 crore rupees at a cut-off rate of 5.24 percent.
- Variable Rate Reverse Repo is a discretionary monetary tool used by the central bank under the Liquidity Adjustment Facility to absorb short-term surplus liquidity from the banking system and align the Weighted Average Call Rate with the policy repo rate.
- Unlike the Standing Deposit Facility which is a non-collateralized standing window, the Variable Rate Reverse Repo is an auction-based mechanism where banks bid for interest rates, requiring the central bank to provide government securities as collateral to participating commercial banks.
🎯 Prelims High-Yield Examination Points
Variable Rate Reverse Repo is an auction-based discretionary tool requiring government securities as collateral, whereas the Standing Deposit Facility is a continuous, non-collateralized standing facility that acts as the floor of the Liquidity Adjustment Facility corridor.
⚖️ Mains Analytical & Syllabus Linkages
The shift from fixed-rate reverse repo to variable-rate auctions reflects the central bank's transition toward market-determined pricing for short-term surpluses, enhancing the efficiency of monetary policy transmission.
🎯 UPSC Prelims Practice Drill
With reference to the monetary policy operations of the Reserve Bank of India (RBI), consider the following statements regarding the Variable Rate Reverse Repo (VRRR) and the Standing Deposit Facility (SDF): 1. VRRR is a discretionary tool under the Liquidity Adjustment Facility (LAF) used to absorb short-term surplus liquidity and align the Weighted Average Call Rate (WACR) with the policy repo rate. 2. Unlike the SDF which is a non-collateralized standing window, the VRRR is an auction-based mechanism that requires the RBI to provide government securities as collateral to participating banks. Which of the statements given above is/are correct?
- [A] 1 only
- [B] 2 only
- [C] Both 1 and 2
- [D] Neither 1 nor 2
▶ Reveal Official Answer & Analytical Explanation
Both statements are correct. VRRR is a discretionary tool under the LAF used by the RBI to absorb short-term surplus liquidity and align the Weighted Average Call Rate (WACR) with the policy repo rate. Furthermore, while the Standing Deposit Facility (SDF) is a non-collateralized standing window, the VRRR is an auction-based mechanism where the RBI must provide government securities as collateral to the participating commercial banks.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.