← 15 October 2026's Current Affairs · Economy GA Prelims ★★★☆☆ Mains ★★★☆☆
RBI to hold Overnight Variable Rate Reverse Repo auction on 15 October
വാർത്തയിൽ എന്തുകൊണ്ട്?
The RBI borrows from banks, not the other way round: the VRRR logic GS-III Prelims tests
The Reserve Bank of India will conduct an overnight Variable Rate Reverse Repo auction under its Liquidity Adjustment Facility on 15 October 2026 after reviewing liquidity conditions. In a reverse repo the RBI borrows money from banks, so a VRRR auction absorbs surplus liquidity at a rate discovered through bidding.
Why it matters: general awareness
What you need to know
2 മിനിറ്റ്
The Reserve Bank of India will conduct an overnight Variable Rate Reverse Repo auction under its Liquidity Adjustment Facility on 15 October 2026 after reviewing liquidity conditions.
In a reverse repo the RBI borrows money from banks, so a VRRR auction absorbs surplus liquidity at a rate discovered through bidding.
ഉറവിടങ്ങൾ: Topper IAS editorial (PIB / The Hindu / Indian Express)
പ്രധാന വസ്തുതകൾ
Remember these
- VRRR = Variable Rate Reverse Repo, an overnight auction under the RBI's Liquidity Adjustment Facility (LAF)
- In a reverse repo the RBI borrows money from banks, absorbing surplus liquidity
- In VRRR the rate is discovered through bidding, unlike the fixed-rate reverse repo
- Repo is the rate at which the RBI lends to banks; reverse repo is the rate at which it borrows
- The auction is scheduled for 15 October 2026 after a review of liquidity conditions
പ്രിലിംസ് · മെയിൻസ്
How the exam will ask it
പ്രിലിംസ്
- In a reverse repo operation, the RBI borrows funds from commercial banks against government securities.
- A Variable Rate Reverse Repo auction is used to absorb surplus liquidity from the banking system.
- The VRRR rate is determined through competitive bidding rather than being fixed by the RBI.
- The Liquidity Adjustment Facility (LAF) includes repo and reverse repo operations.
മെയിൻസ്
GS-III (Economy): Surplus banking liquidity can weaken the transmission of policy rates and fuel inflation. The RBI uses LAF tools such as VRRR auctions to absorb excess funds and keep short-term rates near the policy rate. Effective liquidity management, with clear communication, helps balance growth and price stability.
Quick recall
Answer before you reveal
With reference to the Variable Rate Reverse Repo (VRRR) auction conducted by the RBI, consider the following statements:
- In a reverse repo operation, the RBI borrows funds from banks.
- VRRR auctions are used to absorb surplus liquidity from the banking system.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
ഉത്തരം കാണിക്കൂ
ഉത്തരം: C — Both 1 and 2 is correct. Both statements are correct. A reverse repo means the RBI borrows from banks against government securities, and VRRR auctions are used to absorb surplus liquidity.
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