← 26 October 2026's Current Affairs · Economy GA Prelims ★★★★☆ Mains ★★★☆☆
RBI conducts 4-day Variable Rate Repo auction
వార్తల్లో ఎందుకు?
RBI lends Rs 1.5 lakh crore for just four days: repo versus reverse repo, explained for GS3
RBI injects liquidity through a Rs 1.5 lakh crore four-day VRR auction.
Why it matters: factual, Prelims-type
What you need to know
2 నిమి
The Reserve Bank of India announced a four-day Variable Rate Repo auction under the Liquidity Adjustment Facility on 26 October 2026, with a notified amount of Rs 1,50,000 crore.
The funds are to be reversed on 30 October.
The step was taken after reviewing current and evolving liquidity conditions.
మూలాలు: Topper IAS editorial (PIB / The Hindu / Indian Express)
ముఖ్య వాస్తవాలు
Remember these
- RBI announced a four-day Variable Rate Repo (VRR) auction on 26 October 2026 under the Liquidity Adjustment Facility (LAF)
- Notified amount: Rs 1,50,000 crore, to be reversed on 30 October
- A repo auction lends funds to banks against government securities, injecting liquidity
- A reverse repo (or variable rate reverse repo) does the opposite: it absorbs surplus liquidity
- LAF is the RBI's main tool for day-to-day liquidity management; the repo rate is the policy rate
ప్రిలిమ్స్ · మెయిన్స్
How the exam will ask it
ప్రిలిమ్స్
- Under the Liquidity Adjustment Facility, a repo operation injects liquidity into the banking system while a reverse repo operation absorbs it.
- In a Variable Rate Repo auction, the interest rate is determined through bidding by banks, unlike a fixed rate repo.
- Changes in the CRR and SLR are announced separately and are not carried out through repo auctions.
మెయిన్స్
GS3 (Economy): Liquidity management is central to monetary policy transmission. The RBI uses LAF instruments such as VRR auctions to keep short-term rates close to the policy repo rate and meet banks' temporary funding needs. Way forward: clear communication, calibrated use of fine-tuning operations and a mix of durable and short-term tools to avoid volatility in money markets.
Quick recall
Answer before you reveal
A Variable Rate Repo auction conducted by the RBI under the Liquidity Adjustment Facility is intended to:
- Absorb surplus liquidity from the banking system
- Raise the Cash Reserve Ratio of banks
- Inject short-term liquidity into the banking system
- Change the Statutory Liquidity Ratio
సమాధానం చూడండి
సమాధానం: C — Correct: Inject short-term liquidity into the banking system — A repo auction lends funds to banks against securities for a fixed tenor, injecting short-term liquidity. • Absorb surplus liquidity from the banking system — wrong: Absorbing surplus liquidity is the role of a reverse repo or variable rate reverse repo, not a repo. • Raise the Cash Reserve Ratio of banks — wrong: The CRR is changed by a separate announcement and not through a repo auction. • Change the Statutory Liquidity Ratio — wrong: The SLR is a statutory norm and is not altered through a repo auction.
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