ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 19 April. Click Here for more information.
ForumIAS Answer Writing Focus Group (AWFG) for Mains 2024 commencing from 24th June 2024. The Entrance Test for the program will be held on 28th April 2024 at 9 AM. To know more about the program visit: https://forumias.com/blog/awfg2024
Source: The post is based on the article “RBI presses ahead with VRRR to suck out excess liquidity from banking system” published in The Hindu Businessline on 7th July 2023
What is the News?
The Reserve Bank of India (RBI) has said that it will conduct a three-day variable rate reverse repo (VRRR) auction for Rs 2 lakh crore.
What is Variable rate reverse repo(VRRR)?
The Reserve Bank of India(RBI) uses various ways to increase or decrease liquidity in the banking system.
Repo rate is the rate at which the central bank gives loans to commercial banks against government securities.
Reverse repo rate is the interest that RBI pays to banks for the funds.Variable rate reverse repo(VRRR) is a sub-type of reverse repo.
VRRR is usually undertaken to reduce surplus liquidity by withdrawing existing cash in the system.
RBI has been conducting VRRR everyday since June 30 to ensure that the overnight call money rate remains close to the target rate of 6.50 per cent.
