← 4 November 2026's Current Affairs · Economy GA Prelims ★★★★☆ Mains ★★★☆☆
RBI announces VRRR auction and launches three household surveys
వార్తల్లో ఎందుకు?
The RBI drains liquidity but fixes no rate in advance: the VRRR auction every GS3 banking answer needs
RBI holds an overnight VRRR auction and starts its November household surveys.
Why it matters: asked in UPSC 2022
What you need to know
2 నిమి
The Reserve Bank of India announced an Overnight Variable Rate Reverse Repo (VRRR) auction under the Liquidity Adjustment Facility for 4 November 2026.
A VRRR auction absorbs surplus liquidity from the banking system, and the rate is discovered through bidding rather than fixed in advance.
The RBI also launched the November rounds of its Inflation Expectations Survey of Households, the Urban Consumer Confidence Survey and the Rural Consumer Confidence Survey.
మూలాలు: Topper IAS editorial (PIB / The Hindu / Indian Express)
ముఖ్య వాస్తవాలు
Remember these
- VRRR = Variable Rate Reverse Repo, conducted under the Liquidity Adjustment Facility (LAF)
- A VRRR auction absorbs surplus liquidity from banks; the rate is discovered through bidding, not fixed in advance
- Overnight VRRR auction announced for 4 November 2026
- RBI launched November rounds of the Inflation Expectations Survey of Households, Urban Consumer Confidence Survey and Rural Consumer Confidence Survey
- Repo injects liquidity into the system; reverse repo withdraws it
ప్రిలిమ్స్ · మెయిన్స్
How the exam will ask it
ప్రిలిమ్స్
- VRRR auctions are conducted by the RBI under the Liquidity Adjustment Facility to absorb surplus liquidity from the banking system.
- In a VRRR auction the rate is determined through bidding by banks, unlike the fixed-rate reverse repo.
- A reverse repo operation draws funds from banks into the RBI, whereas a repo operation injects liquidity by lending against government securities.
- The RBI's Inflation Expectations Survey of Households and the Consumer Confidence Surveys are periodic surveys that gauge public sentiment.
మెయిన్స్
GS3 (Economy): Surplus banking liquidity can blunt monetary policy transmission. The RBI uses LAF tools such as variable rate reverse repo auctions to absorb excess funds and keep short-term rates near the policy rate, while household surveys feed its inflation outlook. Way forward: calibrated, market-based liquidity management with better communication to anchor inflation expectations.
PYQ connection
A question UPSC has already asked on this
With reference to the Indian economy, consider the following statements:
- If the inflation is too high Reserve Bank of India (RBI) is likely to buy government securities.
- If the rupee is rapidly depreciating RBI is likely to sell dollars in the market.
- If interest rates in the USA or European Union were to fall that is likely to induce RBI to buy dollars.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
సమాధానం చూడండి
సమాధానం: B
Why this matters: today's issue is directly connected to a concept UPSC has already tested. Read the story with this question in mind.
Practise this PYQ →Quick recall
Answer before you reveal
With reference to the Variable Rate Reverse Repo (VRRR) auctions conducted by the Reserve Bank of India, consider the following statements:
- They are held under the Liquidity Adjustment Facility to absorb surplus liquidity from the banking system.
- Through them the RBI injects liquidity by lending funds to banks against government securities.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
సమాధానం చూడండి
సమాధానం: A — Correct: 1 only — Statement 1 is correct and statement 2 is wrong, so only the first statement holds. • 2 only — wrong: Statement 2 describes a repo operation, which injects liquidity, so it cannot be the only correct one. • Both 1 and 2 — wrong: Statement 2 is wrong because a reverse repo draws funds from banks into the RBI, so both cannot be correct. • Neither 1 nor 2 — wrong: Statement 1 is correct, so "Neither" is wrong.
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