← 4 October 2026's Current Affairs · Economy GA Prelims ★★★☆☆ Mains ★★★☆☆
RBI names Sudhakar Malli Executive Director; schedules VRRR auction
వార్తల్లో ఎందుకు?
RBI borrows from banks to drain cash: the VRRR reverse repo mechanism GS3 monetary policy answers need
RBI appointment, a liquidity-absorbing VRRR auction and its crypto stance.
Why it matters: general awareness
What you need to know
2 నిమి
The Reserve Bank of India appointed Sudhakar Malli as an Executive Director.
The RBI also announced an Overnight Variable Rate Reverse Repo auction under the Liquidity Adjustment Facility for 5 October 2026, after reviewing liquidity conditions.
A reverse repo absorbs surplus liquidity from banks.
Governor Sanjay Malhotra said India is cautious on crypto assets but backs the underlying technology.
మూలాలు: Topper IAS editorial (PIB / The Hindu / Indian Express)
ముఖ్య వాస్తవాలు
Remember these
- RBI appointed Sudhakar Malli as an Executive Director.
- An Overnight Variable Rate Reverse Repo (VRRR) auction under the Liquidity Adjustment Facility is scheduled for 5 October 2026.
- In a reverse repo the RBI borrows from banks against securities, absorbing surplus liquidity.
- Repo injects liquidity; reverse repo absorbs it.
- Governor Sanjay Malhotra: India is cautious on crypto assets but supports the underlying technology.
ప్రిలిమ్స్ · మెయిన్స్
How the exam will ask it
ప్రిలిమ్స్
- The Liquidity Adjustment Facility (LAF) comprises repo and reverse repo operations through which the RBI manages short-term liquidity.
- A reverse repo operation absorbs surplus liquidity from the banking system, whereas a repo operation injects liquidity.
- Variable rate auctions fix the rate through bidding by banks rather than at a fixed administered rate.
- Changes in the Cash Reserve Ratio are a separate policy instrument and not part of LAF auctions.
మెయిన్స్
GS3 Economy: Monetary policy. Surplus liquidity can blunt policy transmission and fuel inflation, so the RBI uses LAF tools such as VRRR to absorb it and keep short-term rates near the policy rate. The way forward is calibrated, transparent liquidity management alongside a cautious, technology-friendly regulatory stance on crypto assets.
Quick recall
Answer before you reveal
The RBI conducts an Overnight Variable Rate Reverse Repo (VRRR) auction under the Liquidity Adjustment Facility when it wants to:
- inject liquidity into the banking system
- absorb surplus liquidity from the banking system
- raise the Cash Reserve Ratio of banks
- sell government securities to the public
సమాధానం చూడండి
సమాధానం: B — Correct: absorb surplus liquidity from the banking system — In a reverse repo the RBI borrows funds from banks against securities, which drains excess liquidity from the system. • inject liquidity into the banking system — wrong: Injecting liquidity is done through repo or variable rate repo operations, the opposite of a reverse repo. • raise the Cash Reserve Ratio of banks — wrong: The Cash Reserve Ratio is changed by a policy decision, not by an auction under the LAF. • sell government securities to the public — wrong: Selling securities to the public is an open market operation, separate from LAF auctions with banks.
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