{"id":371116,"date":"2026-09-05T14:35:46","date_gmt":"2026-09-05T09:05:46","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=371116"},"modified":"2026-09-05T14:35:46","modified_gmt":"2026-09-05T09:05:46","slug":"variable-rate-reverse-repo-vrrr","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/variable-rate-reverse-repo-vrrr\/","title":{"rendered":"Variable Rate Reverse Repo (VRRR)"},"content":{"rendered":"<div class=\"content-box-green\">\n<p><b>News:<\/b><span style=\"font-weight: 400;\"> The Reserve Bank of India has decided to conduct a 30-day variable rate reverse repo (VRRR) auction on September 7 to suck out \u20b97 lakh crore surplus liquidity from the banking system.<\/span><\/p>\n<\/div>\n<h2 class=\"red-h2-box\"><b>About Variable Rate Reverse Repo (VRRR)<\/b><\/h2>\n<figure style=\"width: 378px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/encrypted-tbn0.gstatic.com\/images?q=tbn:ANd9GcS8xEpvBV4-A6c6wFuhr1vPVXeuVCcV7bl9ioBqvaLDIA&amp;s=10\" alt=\"VRRR\" width=\"378\" height=\"212\" \/><figcaption class=\"wp-caption-text\">Source: ET<\/figcaption><\/figure>\n<ul>\n<li><span style=\"font-weight: 400;\">Variable Rate Reverse Repo (VRRR) is the rate at which the <strong>Reserve Bank of India (RBI) borrows money from banks<\/strong> for a<strong> variable period through an auction process.<\/strong><\/span><\/li>\n<li><span style=\"font-weight: 400;\">RBI announces it as part of its<strong> liquidity management framework.<\/strong><\/span><\/li>\n<li><span style=\"font-weight: 400;\">It usually conducts<strong> variable rate repo auctions<\/strong> t<strong>o inject liquidity in the banking system<\/strong> when it turns into deficit mode.<\/span><\/li>\n<li><b>How it works:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The RBI <strong>announces a VRRR auction,<\/strong> specifying the total amount and tenor.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"><strong>Banks submit competitive bids,<\/strong> stating the amount and interest rate at which they are willing to lend funds to the RBI.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The RBI <strong>determines the cut-off rate based on the bids<\/strong> received and accepts offers at or above this rate.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"><strong>Banks earn interest at the market-determined rate<\/strong> for the duration of the VRRR.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Difference between fixed reverse repo rate and VRRR<\/b><span style=\"font-weight: 400;\">: Unlike the fixed reverse repo rate, which is predetermined by the RBI, <strong>the VRRR rate is determined through an auction process,<\/strong> allowing market forces to influence the rate.<\/span><\/li>\n<li><strong>About\u00a0<a href=\"https:\/\/forumias.com\/blog\/rbis-monetary-policy-instruments\/\">Repo Rate and Reverse Repo Rate<\/a>:<\/strong>\u00a0The <strong>interest rate<\/strong> that the <strong>RBI charges<\/strong> when <strong>commercial banks borrow money<\/strong> from it is called the\u00a0<strong>repo rate<\/strong>.\n<ul>\n<li>The <strong>interest rate the central bank pays<\/strong> commercial banks when they <strong>park their excess cash<\/strong> is called the\u00a0<strong>reverse repo rate<\/strong>.<\/li>\n<li>\u00a0Since RBI is also a bank and has to earn more than it pays<strong>, the repo rate is higher than the reverse repo rate.<\/strong><\/li>\n<li>The <strong>current repo rate is 5.25%,<\/strong> and the <strong>reverse repo rate stands at 3.35%.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: The Reserve Bank of India has decided to conduct a 30-day variable rate reverse repo (VRRR) auction on September 7 to suck out \u20b97 lakh crore surplus liquidity from the banking system. About Variable Rate Reverse Repo (VRRR) Variable Rate Reverse Repo (VRRR) is the rate at which the Reserve Bank of India (RBI)&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/variable-rate-reverse-repo-vrrr\/\">Continue reading <span class=\"screen-reader-text\">Variable Rate Reverse Repo (VRRR)<\/span><\/a><\/p>\n","protected":false},"author":10366,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,12039],"tags":[11872,10500],"class_list":["post-371116","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-knolls","tag-9pm-daily-factly","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/371116","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10366"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=371116"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/371116\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=371116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=371116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=371116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}