RBI Variable Rate Repo (VRR) Auctions in October 2026, Explained
In the last week of October 2026, the Reserve Bank of India (RBI) ran two short-term Variable Rate Repo (VRR) auctions to add money to the banking system. These auctions get far less attention than a policy rate decision, but they show how RBI manages day-to-day liquidity.
Here is what RBI announced, what the results show, and how to read them.
What RBI announced
On 23 October 2026, RBI said that "on a review of current and evolving liquidity conditions in the near term", it would conduct a VRR auction on Monday, 26 October 2026, with these terms:
Notified amount: ₹1,50,000 crore
Tenor: 4 days
Window: 9:30 AM to 10:00 AM
Date of reversal: 30 October 2026 (Friday)
RBI added that the operational guidelines would be the same as in its press release dated 20 January 2022.
The same day, 23 October, RBI had also held a 3-day VRR auction.
The numbers at a glance
3-day VRR, 23 October 2026
Notified amount: ₹50,000 crore
Bids received: ₹1,06,949 crore
Amount allotted: ₹50,003 crore
Cut-off rate: 5.58%
Weighted average rate: 5.60%
Partial allotment at cut-off: 30.99% of bids at the cut-off rate
4-day VRR, 26 October 2026
Notified amount: ₹1,50,000 crore
Bids received: ₹1,86,666 crore
Amount allotted: ₹1,50,007 crore
Cut-off rate: 5.55%
Weighted average rate: 5.59%
Partial allotment at cut-off: 85.07% of bids at the cut-off rate
What a VRR auction is
A repo is a short-term loan in which RBI lends money to banks against government securities as collateral, and the loan is reversed on a set date.
In a variable rate repo auction, the interest rate is not fixed in advance. Banks bid for funds at the rates they are willing to pay. RBI announces the total amount it is willing to lend (the notified amount), accepts bids up to that amount, and publishes the results.
VRR auctions are one of the tools RBI uses under its Liquidity Adjustment Facility (LAF) to manage the amount of money in the banking system. When RBI conducts a VRR auction, it is adding liquidity for the stated tenor.
How to read the result table
Bids received vs notified amount
This shows demand for the funds. In simple arithmetic:
On 23 October, bids were about 2.1 times the notified amount (₹1,06,949 crore ÷ ₹50,000 crore).
On 26 October, bids were about 1.2 times the notified amount (₹1,86,666 crore ÷ ₹1,50,000 crore).
Both auctions were oversubscribed, which means banks wanted more money than RBI offered.
Cut-off rate
The rate at which the last accepted bid was allotted.
Weighted average rate
The average rate across all accepted bids, weighted by amount. It is a little higher than the cut-off because some banks bid higher rates to make sure they got funds.
Partial allotment percentage
When too many bids arrive at the cut-off rate, RBI allots only part of them. On 26 October, bids at the cut-off rate received 85.07% of what they asked for.
How this connects to the policy rate
At its October 5 to 7, 2026 meeting, the Monetary Policy Committee raised the policy repo rate by 25 basis points to 5.50%. The standing deposit facility (SDF) rate stands at 5.25%, and the marginal standing facility (MSF) rate and Bank Rate at 5.75%.
The cut-off rates in both VRR auctions were above the policy repo rate. In simple arithmetic, the 26 October cut-off of 5.55% was 5 basis points above 5.50%, and the 23 October cut-off of 5.58% was 8 basis points above.
This is useful context when you follow short-term rates. A similar idea of rates set through bidding shows up in T-bill auctions, and the idea of rates resetting over time is explained in our post on floating rate bond coupon reset.
What the data does not tell you
It does not explain why liquidity was tight. RBI's announcement refers only to "current and evolving liquidity conditions".
It is not a policy signal by itself. A VRR auction is a liquidity operation. Policy rate decisions come from the Monetary Policy Committee.
It does not show which banks bid. RBI publishes aggregate figures only.
It is not a market signal. Liquidity data is one input among many, like India VIX, and should not drive an investment decision by itself.
FAQ
What is a Variable Rate Repo (VRR) auction?
It is an auction in which RBI lends funds to banks for a fixed short tenor against government securities, with the interest rate set through bidding rather than fixed in advance.
How much did RBI offer in the 26 October 2026 VRR auction?
RBI notified ₹1,50,000 crore for 4 days. It received bids of ₹1,86,666 crore and allotted ₹1,50,007 crore at a cut-off rate of 5.55%.
When were these funds due to be returned?
RBI's announcement gave the date of reversal for the 4-day auction as 30 October 2026.
What is RBI's policy repo rate now?
After the October 5 to 7, 2026 MPC meeting, the policy repo rate is 5.50%, with the SDF rate at 5.25% and the MSF rate at 5.75%.
Sources
About the author: Nishi Jain is a full-time trader in Jaipur and ex-JioBlackRock. Updates on Telegram: t.me/nishijain_com
This article is for information and education only. It is not investment advice or a recommendation to buy, sell or hold any security. Figures are from RBI press releases; refer to the originals for full detail.
