The Reserve Bank of India conducted a 3-day Variable Rate Reverse Repo (VRRR) auction on 25 September 2026. The RBI had notified an amount of ₹1,50,000 crore. Banks submitted offers worth ₹90,280 crore, and the central bank accepted the full ₹90,280 crore at a cut-off rate of 5.24%.
What Happened?
The 25 September VRRR operation was part of the RBI’s money-market liquidity management operations. Unlike a fixed-rate facility where the rate is predetermined, a variable-rate reverse repo auction allocates funds through bids submitted by participating banks.
| VRRR auction parameter | 25 September 2026 |
|---|---|
| Tenor | 3 days |
| Notified amount | ₹1,50,000 crore |
| Offers received | ₹90,280 crore |
| Offers accepted | ₹90,280 crore |
| Cut-off rate | 5.24% |
| Weighted-average rate | 5.24% |
Why It Matters
Liquidity operations are important because short-term money-market conditions affect banks’ funding conditions and the transmission of monetary policy. A VRRR operation is therefore not simply an auction statistic; it is part of the RBI’s toolkit for managing system liquidity.
For banking exams, the key is understanding who provides liquidity, who absorbs liquidity, the direction of funds and the role of the instrument.
Background: Reverse Repo in Simple Terms
In a reverse-repo transaction, banks place funds with the RBI against eligible securities under the applicable framework. From the banking system’s perspective, this means funds move temporarily from banks to the central bank.
A variable-rate reverse repo auction lets participating institutions bid for the rate instead of simply accepting a single predetermined rate. The RBI can therefore use the auction to manage liquidity while allowing the market to reveal the rate at which funds are placed.
VRRR Versus Repo
| Instrument | Basic direction | Exam idea |
|---|---|---|
| Repo | RBI provides liquidity to banks | Banking-system liquidity increases |
| Reverse Repo / liquidity absorption operation | Banks place funds with RBI | Liquidity is absorbed temporarily |
| VRRR | Variable-rate liquidity operation | Rate discovered through auction bidding |
Students should avoid treating every reverse-repo-related event as identical to the policy rate. Operational liquidity management and the policy-rate framework are related but distinct.
What Does the ₹90,280 Crore Acceptance Tell Us?
The accepted amount was below the RBI’s notified ceiling of ₹1.50 lakh crore. Banks offered ₹90,280 crore, so there was no need for the RBI to allocate beyond what the market submitted.
The arithmetic is simple but exam-worthy:
₹1,50,000 crore notified − ₹90,280 crore accepted = ₹59,720 crore of the notified amount not utilised.
This does not mean ₹59,720 crore was “withdrawn” from banks. It simply represents the portion of the notified ceiling that was not taken up in that particular auction.
Why 5.24% Matters
The 5.24% cut-off rate is the rate at which the auction cleared. The weighted-average rate was also 5.24%, indicating that the accepted amount was effectively concentrated at that rate in the reported results.
Banking examinations may ask candidates to distinguish a cut-off rate from the amount accepted, the notified amount and the weighted-average rate.
Static Banking Awareness Connection
Liquidity refers broadly to the availability of funds in the financial system. Money-market operations influence very short-term liquidity and interest-rate conditions. Open market operations (OMOs) are a different tool, involving outright purchase or sale of government securities rather than the short-duration auction structure used in a VRRR operation.
Exam Relevance
SBI/IBPS: revise RBI liquidity-management tools, repo, reverse repo, MSF, SDF and money-market terminology.
RBI/NABARD/SEBI: understand the mechanism and distinguish auction-based operations from administered policy rates.
SSC/UPSC: use this event to revise central-bank functions, liquidity management and monetary-policy transmission.
Possible MCQ Areas
- VRRR tenor on 25 September 2026: 3 days.
- Notified amount: ₹1,50,000 crore.
- Accepted amount: ₹90,280 crore.
- Cut-off rate: 5.24%.
- VRRR is a variable-rate auction.
- Unutilised notified ceiling: ₹59,720 crore.
Official Source
Reserve Bank of India: Result of 3-day VRRR auction held on 25 September 2026
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