Variable Rate Reverse Repo (VRRR):
The Reserve Bank of India (RBI) conducted a ₹1 lakh crore 7-day Variable Rate Reverse Repo (VRRR) auction to manage surplus liquidity, which had peaked at ₹3.75 lakh crore. The Variable Rate Reverse Repo (VRRR) is a monetary policy tool used by the RBI to absorb excess liquidity from the banking system for a fixed duration, with the interest rate determined through auction rather than being fixed. It allows banks to lend funds to the RBI for a period longer than one day typically 7, 14, or 28 days in exchange for interest. Announced By the Reserve Bank of India (RBI) as part of its liquidity management framework.Objective is to manage surplus liquidity in the financial system. To fine-tune short-term interest rates and strengthen the monetary transmission mechanism. To provide a market-driven interest rate environment in short-term lending between banks and the central bank.
