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Key Highlights:
a) Due to rising inflation
b) Due to surplus liquidity in the banking system
c) Because of high demand from banks
d) To introduce a new monetary policy tool
Answer: b) The Reserve Bank of India (RBI) discontinued daily Variable Rate Repo (VRR) auctions on June 11, 2025, due to surplus liquidity in the banking system, estimated at ₹2.75–3 lakh crore.
- VRR auctions, introd
- uced on January 16, 2025, aimed to ease short-term liquidity tightness.
- Recent auctions saw low demand, with banks borrowing only ₹3,711 crore on June 9 and ₹3,853 crore on June 10 against a ₹25,000 crore limit.
- The RBI’s 100 bps Cash Reserve Ratio (CRR) cut is expected to release ₹2.5 lakh crore into the system.
- While daily VRR auctions end, the RBI will continue 14-day VRR auctions, Open Market Operations (OMO), and Standing Deposit Facility (SDF) to manage liquidity.
Question:
Q.1 Why did the Reserve Bank of India (RBI) discontinue daily Variable Rate Repo (VRR) auctions on June 11, 2025?a) Due to rising inflation
b) Due to surplus liquidity in the banking system
c) Because of high demand from banks
d) To introduce a new monetary policy tool
Answer: b) The Reserve Bank of India (RBI) discontinued daily Variable Rate Repo (VRR) auctions on June 11, 2025, due to surplus liquidity in the banking system, estimated at ₹2.75–3 lakh crore.