RBI · Government of India ·

Result of the Second Overnight Variable Rate Reverse Repo (VRRR) auction held on October 05, 2026

Distilled Policy Brief

  • The Reserve Bank of India conducted a Second Overnight Variable Rate Reverse Repo auction on October 05, 2026, with a notified amount of ₹50,000 crore.
  • Banks showed lower participation, submitting offers totaling ₹10,142 crore, which was fully accepted at a cut-off and weighted average rate of 5.24 percent.

🎯 Prelims High-Yield Examination Points

Variable Rate Reverse Repo (VRRR) auctions are liquidity management tools used by the RBI to absorb surplus liquidity from the banking system; in this auction, the cut-off rate stood at 5.24 percent for a 1-day tenor.

⚖️ Mains Analytical & Syllabus Linkages

Analyzing the effectiveness of RBI's liquidity management operations highlights how central banks utilize market-based instruments to anchor short-term interest rates and manage systemic liquidity surpluses.

🎯 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):

  • [A] VRRR auctions are used by the RBI to inject liquidity into the banking system.
  • [B] In a VRRR auction, banks submit offers to park their excess funds with the RBI at a rate determined through the auction process.
  • [C] The notified amount in a VRRR auction is always fully subscribed by banks due to fixed repo rates.
  • [D] VRRR is a permanent facility like the marginal standing facility (MSF) with no specific tenors.
▶ Reveal Official Answer & Analytical Explanation
✓ Correct Option: [B] In a VRRR auction, banks submit offers to park their excess funds with the RBI at a rate determined through the auction process.

A Variable Rate Reverse Repo (VRRR) auction is a liquidity management tool used by the RBI to absorb (rather than inject) excess liquidity from the banking system by inviting bids from banks to park funds. In this specific auction, banks submitted offers totaling ₹10,142 crore against a notified amount of ₹50,000 crore, indicating lower participation, and the accepted offers were determined at a cut-off and weighted average rate of 5.24 percent. Therefore, statement 2 is correct while the others misstate the purpose or mechanics of VRRR auctions.

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): Indian Economy by Ramesh Singh or Sanjeev Verma - Covers Repo, Reverse Repo, MSF, and VRRR operations of the RBI.