Source: BL
Context:
The Reserve Bank of India injected ₹25,101 crore into the banking system through a 3-day Variable Rate Repo (VRR) auction on March 20, 2026, to manage short-term liquidity conditions.
What is a VRR Auction?
A Variable Rate Repo (VRR) is a short-term liquidity management tool used by RBI where:
- Banks borrow funds from RBI
- Interest rate is market-determined (auction-based)
- Helps address temporary liquidity mismatches
Key Concepts
Standing Deposit Facility (SDF)
- Facility where banks park surplus funds with RBI
- No collateral required
- Acts as floor of liquidity corridor
Open Market Operations (OMO)
- RBI buys/sells government securities
- Injects or absorbs durable (long-term) liquidity
