MCQ

Variable Rate Repo MCQ - Practice Questions with Answers

Solve 1 Variable Rate Repo questions for RAS/RPSC preparation.

Practice questions

Q1Consider the following statements regarding the Variable Rate Repo (VRR) auction conducted by the RBI on 18 May 2026: 1. In a VRR operation, the interest rate is fixed by the RBI in advance and is the same for all banks. 2. The seven-day VRR auction was worth Rs 1 trillion and was aimed at managing liquidity in the banking system. Which of the statements given above is/are correct?

A 1 only

B Both 1 and 2

C 2 only

D Neither 1 nor 2

Explanation

Statement 1 is incorrect: in a VRR operation the rate is market-determined through an auction of bids, not fixed in advance (that would be a fixed-rate repo). Statement 2 is correct: the seven-day VRR auction on 18 May 2026 was worth Rs 1 trillion to manage banking-system liquidity.

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