✎ VRRR auctions help RBI manage liquidity by absorbing excess funds at a fixed rate.
Relevance for Banking, SSC & RBI Grade B exams: Economy
The Reserve Bank of India (RBI) conducted the second overnight Variable Rate Reverse Repo (VRRR) auction on September 29, 2026, with a notified amount of ₹1,00,000 crore. The RBI accepted bids worth ₹33,770 crore at a cut-off rate of 5.24%, matching the weighted average rate. This auction reflects the RBI’s liquidity management strategy, where banks park surplus funds with the central bank at a variable rate, helping regulate money supply and interest rates in the banking system. For banking and SSC aspirants, understanding VRRR operations is crucial as it directly impacts liquidity conditions, which influence lending rates, deposit rates, and overall credit growth—key areas often tested in exams.
For RBI Grade B and competitive exam aspirants, this auction’s outcome highlights the RBI’s role in fine-tuning liquidity through VRRR auctions, a tool used to absorb excess liquidity when inflation risks loom or to signal monetary policy stance. The cut-off rate of 5.24% may also be relevant for discussions on benchmark rates, transmission of monetary policy, and the central bank’s stance on inflation control. Aspirants should note how such auctions impact banking operations, such as deposit mobilisation and credit disbursement, as these concepts frequently appear in descriptive and objective questions in exams like SBI PO, IBPS, and RBI Grade B.
Source: RBI
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