RBI’s Variable Rate Reverse Repo Auctions for Liquidity Absorption

  • In July 2025, the RBI conducted a series of Variable Rate Reverse Repo (VRRR) auctions to absorb a liquidity surplus of Rs.2.5 lakh crore from the banking system.
  • VRRR is an auction-based tool used by the RBI to absorb surplus liquidity from the banking system.
  • Unlike fixed-rate reverse repo, the interest rate in VRRR auctions is determined by a market-driven bidding process.
  • This tool allows the RBI to fine-tune the weighted average call rate within the policy corridor.
  • Banks park their excess funds with the RBI for varying tenures, typically ranging from fourteen to twenty-eight days.

LAF Corridor and Liquidity Tightening

  • The Liquidity Adjustment ....
Do You Want to Read More?
Subscribe Now
To get access to detailed content

Already a Member? Login here

Take Annual Subscription and get the following Advantage
The annual members of the Civil Services Chronicle can read the monthly content of the magazine as well as the Chronicle magazine archives.
Readers can study all the material since 2018 of the Civil Services Chronicle monthly issue in the form of Chronicle magazine archives.
Be an Annual Subscriber

Current Affairs