RBI · Government of India ·

Result of the Overnight Variable Rate Reverse Repo (VRRR) auction held on October 08, 2026

Distilled Policy Brief

  • The Reserve Bank of India conducted an overnight Variable Rate Reverse Repo (VRRR) auction on October 08, 2026, with a notified amount of 2,00,000 crore rupees to absorb surplus liquidity from the banking system.
  • The auction received and accepted offers worth 1,60,664 crore rupees at a uniform cut-off rate and weighted average rate of 5.49 percent, reflecting the prevailing short-term money market conditions.
  • VRRR serves as a key fine-tuning operations tool under the RBI's revised Liquidity Management Framework to align the Weighted Average Call Rate with the policy repo rate.

🎯 Prelims High-Yield Examination Points

Variable Rate Reverse Repo (VRRR) is a discretionary liquidity absorption tool under the Liquidity Adjustment Facility (LAF) where the interest rate is determined through a market-based bidding process, unlike the fixed-rate reverse repo.

⚖️ Mains Analytical & Syllabus Linkages

The shift from fixed-rate reverse repo to variable-rate auctions (VRR/VRRR) highlights the RBI's transition towards market-determined pricing for liquidity management, ensuring better monetary policy transmission and preventing excessive volatility in the call money market.

🎯 UPSC Prelims Practice Drill

Economy

Consider the following statements regarding the Variable Rate Reverse Repo (VRRR) auctions conducted by the Reserve Bank of India (RBI): 1. VRRR auctions are utilized primarily to inject liquidity into the banking system during periods of acute cash deficits. 2. They serve as a key fine-tuning operations tool under the RBI's liquidity management framework to align short-term market rates with the policy repo rate. 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
✓ Correct Option: [B] 2 only

Statement 1 is incorrect because a Variable Rate Reverse Repo (VRRR) auction is conducted to absorb surplus liquidity from the banking system, not to inject liquidity. Statement 2 is correct; VRRR serves as a key fine-tuning operations tool under the RBI's revised Liquidity Management Framework to absorb excess liquidity and align the Weighted Average Call Rate with the policy repo rate.

Tark High-Yield Question Bank ⚡ Practice Full Test in Testing Arena ↗

🏛️ Historical Twin PYQ Anchor (2021)

UPSC Prelims 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.

Forensic Anchor: Cabinet Allocation of Business Rules & NCAP Framework
Examiner Trap Takeaway: UPSC swapped Central Pollution Control Board role with State Pollution Control Boards for state-level monitoring.

📚 Static Syllabus & Constitutional Linkages

Liquidity Adjustment Facility (LAF): Standard Indian Economy textbooks (e.g., Ramesh Singh or Nitin Singhania) explain LAF as the framework containing Repo, Reverse Repo, SDF, and MSF used by the RBI to manage daily liquidity mismatches.
Monetary Policy Corridor: Macroeconomics NCERT and banking references define the corridor as the space between the Marginal Standing Facility (MSF) rate as the ceiling and the Standing Deposit Facility (SDF) rate as the floor, with the Repo rate in the middle.