Economy · GS3.1 · 2026-10-22 · 2 min read · 2026-10-22-am
RBI Conducts Treasury Bills and Overnight Variable Rate Repo Auctions
On October 21, 2026, the Reserve Bank of India conducted auctions for treasury bills and an overnight Variable Rate Repo (VRR). These auctions are important monetary policy tools used by the RBI to manage liquidity and influence short-term interest rates.
The RBI uses treasury bills and VRR auctions to regulate liquidity and maintain stability in the financial system.
Why is this in the news?
The Reserve Bank of India held treasury bills and overnight Variable Rate Repo auctions on October 21, 2026, as part of its liquidity management operations.
[1] Reserve Bank of India[2] Reserve Bank of India[3] Reserve Bank of India
What are the results of the Overnight Variable Rate Repo auction?
- Auction details. The RBI conducted a 1-day VRR auction with a notified amount of ₹50,000 crore and received bids worth ₹93,241 crore.
- Amount allotted and rates. The RBI allotted ₹50,007 crore at a cut-off and weighted average rate of 5.52%, with a partial allotment percentage of 87.99% at the cut-off rate.
What happened in the Treasury Bills auction?
- Auction notified amounts. The RBI notified amounts of ₹8,000 crore for 91-day and 182-day T-Bills, and ₹7,000 crore for 364-day T-Bills.
- Bids received and acceptance. Competitive bids exceeded notified amounts but no bids were accepted, resulting in no allotment for any maturity period.
Why do these auctions matter for monetary policy?
- Liquidity management tool. The VRR auction helps the RBI absorb excess liquidity from banks by borrowing funds at a variable rate, influencing short-term interest rates.
- Market signaling. Treasury bills auctions reflect government borrowing and market demand for short-term securities, impacting money market conditions.
[1] Reserve Bank of India[2] Reserve Bank of India[3] Reserve Bank of India
Key numbers
| Figure | What it measures | Source |
|---|---|---|
| ₹50,000 crore | Notified amount for the 1-day VRR auction | |
| 5.52% | Cut-off and weighted average rate for the VRR auction | |
| ₹8,000 crore | Notified amount for 91-day and 182-day Treasury Bills | |
| ₹7,000 crore | Notified amount for 364-day Treasury Bills |
Back to basics: Monetary Policy Instruments
Monetary policy instruments are tools used by central banks like the RBI to regulate money supply and interest rates to maintain economic stability. Treasury bills are short-term government securities used to manage liquidity and government borrowing. The Variable Rate Repo (VRR) auction is a liquidity absorption mechanism where the RBI borrows funds from banks at a variable interest rate to control excess liquidity in the banking system.
Practice: MCQ, Mains and revision
Prelims MCQ
Consider the following statements about the RBI's auctions held on October 21, 2026: 1. The RBI allotted ₹50,007 crore in the 1-day VRR auction at a cut-off rate of 5.52%. 2. The RBI accepted all competitive bids in the Treasury Bills auction for 91-day, 182-day, and 364-day maturities.
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer and trap
Answer: (a). Statement 2 is incorrect because the RBI did not accept any competitive bids in the Treasury Bills auction despite receiving bids exceeding the notified amounts.
Mains question (10 marks)
Explain the role of Treasury Bills and Variable Rate Repo auctions in the Reserve Bank of India's monetary policy framework.
Explain: Explain how Treasury Bills and VRR auctions function as monetary policy tools and their impact on liquidity management.
Intro: Monetary policy uses various instruments to regulate liquidity and interest rates in the economy.
- Treasury Bills are short-term government securities issued to manage government borrowing and liquidity in the money market.
- Variable Rate Repo auctions allow the RBI to absorb excess liquidity from banks by borrowing funds at variable interest rates.
- These auctions influence short-term interest rates and help maintain monetary stability by controlling money supply.
- The RBI's auction results reflect market demand and provide signals for monetary policy adjustments.
Conclusion: Thus, Treasury Bills and VRR auctions are key tools for the RBI to implement its monetary policy and manage liquidity effectively.
Quick revision
- What was the notified amount for the 1-day VRR auction on October 21, 2026?
- The notified amount was ₹50,000 crore.
- What was the cut-off rate for the VRR auction held on October 21, 2026?
- The cut-off rate was 5.52%.
- Did the RBI accept any competitive bids in the Treasury Bills auction on October 21, 2026?
- No, the RBI did not accept any competitive bids in the Treasury Bills auction.
Updates
- Result of the Overnight Variable Rate Repo (VRR) auction held on October 22, 2026 — Reserve Bank of India: Result of the Overnight Variable Rate Repo (VRR) auction held on October 22, 2026
Sources
- [1] Reserve Bank of India: Result of the Overnight Variable Rate Repo (VRR) auction held on October 21, 2026 · 2026-10-21 · official
- [2] Reserve Bank of India: 91-Day, 182-Day and 364-Day T-Bill Auction Result: Cut-off · 2026-10-21 · official
- [3] Reserve Bank of India: Treasury Bills: Full Auction Result · 2026-10-21 · official