RBI schedules 3-day VRRR auction under LAF

RBI announced a three-day Variable Rate Reverse Repo auction for 21 August 2026.

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A VRRR auction absorbs surplus liquidity from the banking system. It is conducted under the Liquidity Adjustment Facility and uses a market-determined interest rate.

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Important Points for Exam

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1Instrument: VRRR
2Tenor: 3 days
3Date: 21 August 2026
4Framework: LAF
5Purpose: absorb liquidity

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Q1. Which statement correctly describes “RBI schedules 3-day VRRR auction under LAF”?

Correct answer: C

A VRRR auction absorbs surplus liquidity from the banking system. It is conducted under the Liquidity Adjustment Facility and uses a market-determined interest rate.

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