Q7 · UPPSC current affairs · 6 October 2026 · News · RBI VRRR Auctions Liquidity Management

← Q6 Q8 →

English हिंदी

Consider the following statements regarding the liquidity management operations of the Reserve Bank of India:1.Variable Rate Reverse Repo (VRRR) auctions are utilized by the RBI to inject liquidity into the banking system.2.Liquidity Adjustment Facility (LAF) operations directly influence the Weighted Average Call Rate (WACR).Which of the statements given above is/are correct?

A Neither 1 nor 2

B 1 only

C 2 only

D Both 1 and 2

Correct answer: (c) 2 only

Explanation

Statement 1 is incorrect because VRRR (Variable Rate Reverse Repo) is used to absorb excess liquidity from the system, whereas Variable Rate Repo (VRR) is used to inject liquidity. Statement 2 is correct as LAF operations directly influence the Weighted Average Call Rate, which serves as the operating target of monetary policy.

Same topic · past papers

UPSC has asked this before

These previous-year questions sit on the same topic. Open one to practise the earlier ask.

2025 · Q145 · UPPGS
With reference to Global Environment Facility, which of the following statements is/are correct? 1. It was established in 1991. 2. Only the developed countries are donors to it. Select the correct answer from the code given below:
View answer →

← 6 October 2026 quiz