RBI carried out surprise two-day variable rate repo (VRR) auction for ₹50,000 cr

Current Context: On July 23, 2025, the Reserve Bank of India (RBI) conducted a surprise two-day Variable Rate Repo (VRR) auction to inject ₹50,000 crore into the banking system. 

• Reason: The overnight call money rate had surged to 5.79%, breaching the repo rate of 5.50%, prompting RBI to shift its liquidity stance from absorption to injection.
• Liquidity Strain: Despite a surplus of ₹2.42 lakh crore, nearly ₹2 lakh crore was locked in reverse repo operations, leaving only ₹42,000 crore as usable liquidity.
• Auction Outcome: Banks bid ₹71,902 crore; RBI accepted ₹50,001 crore at a weighted average rate of 5.58%.
• Impact: The move helped stabilize short-term rates and signaled RBI’s commitment to maintaining monetary policy alignment.

Question:

Q.1 What was the amount of liquidity injected by the Reserve Bank of India (RBI) through the Variable Rate Repo (VRR) auction on July 23, 2025?
a) ₹71,902 crore
b) ₹50,001 crore
c) ₹2,42,000 crore
d) ₹42,000 crore

Answer: b) The Reserve Bank of India accepted ₹50,001 crore at the Variable Rate Repo auction.