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RBI Absorbs ₹71,971 Crore Through Overnight VRRR Auction
The Reserve Bank of India (RBI) absorbs ₹71,971 crore from the banking system through an overnight Variable Rate Reverse Repo (VRRR) auction. The VRRR auction is used to absorb excess money from banks for a short period.
Variable Rate Reverse Repo Auction:
| Dimension | Key Details |
|---|---|
| Nature | VRRR is a monetary policy tool used by the RBI to absorb excess money from banks for a short period. |
| Mechanism | RBI takes money from banks and offers them interest in return. |
| Interest rate setting | Variable rate means the interest rate is not fixed and is decided by market-based auctions. |
| Contrast with Reverse Repo Rate | In the Reverse Repo Rate, the rate is fixed by RBI. |