Variable Rate Reverse Repo Auctions : RBI
The Reserve Bank of India (RBI) has continued to conduct variable rate reverse repo auctions (VRRRs) to withdraw excess liquidity from the banking system since June 30.
- Repo rate is the rate at which the central bank lends money, while the reverse repo rate is the rate at which the central bank borrows money from commercial banks.
- These rates are used to influence liquidity, credit availability, and inflation in the economy.
- Variable rate reverse repo (VRRR) auctions are a tool used by the Reserve Bank of India (RBI) to manage the amount of money in the banking system.
- The RBI conducts these auctions to absorb excess money from banks when there is too much liquidity.
- The VRRRs aim to maintain the overnight call money rate close to the target rate of 6.50%.
