If banks can borrow from RBI at repo rate then why would they use VRR, is there any limit for borrowing at repo rate and whether banks do not have to submit securities under VRR as collateral.
It is same as repo rate only difference is that rate is decided through auction or we can say demand decides the rate unlike repo where RBI decides the rate.
@@rahulbarnwal7339 for the same reason the shares are traded on stock markets. Means “Let them decide”. There are two scenarios 1. Banks may not be willing to borrow at the fixed rate(repo) by RBI bcz it may be higher. But RBI still wants to lend in order to inject liquidity and it cannot wait for MPC meeting. So using VRR rates may turn out affordable by banks. 2. RBI may not want to lend to banks as there may be enough suppy in the economy which indicates that rates may be low as per demand. But when banks competing to borrow, rates(VRR) will increase. Also one more reason I feel is that RBI can change repo rate only through MPC meeting which is held quarterly and VRR is overnight or maximum of 14 days. Or we can say Repo is permanent while VRR is temporarily used Ps: This is what I have analysed by reading about it. Don’t completely rely upon it.
@@rahulbarnwal7339for the same reason stocks are traded on the stock market. Means “let them decide” Also main reason I feel is that repo is change through mpc meet which is quarterly. VRR is overnight or max 14 days. In order to control liquidity and inflation for short term VRR is used There are two scenarios 1. RBI doesn’t want to lend as there is enough supply in the market and rates are low and RBI cannot wait for Mpc meeting. So banks competing to borrow will bid higher rates thus increasing the VRR, and injection for day or few may slow as it may be costlier for banks to borrow 2. Banks don’t want to borrow as rates are higher. VRR will turn out to be lower than repo in auction. Thus encouraging banks to borrow eventually Increasing the liquidity. By VRR RBI just wants the market forces to control liquidity for a day or few and Repo rate being the primary one if changed by RBI many times will result in volatility and unstable environment domestically as well as globally. Repo rate is observed by all financial players globally and if it is much volatile then they may loose confidence in Indian economy.
Sir I belong to OBC NCL, now i cleared rrb po, if i join this post my family income will be above 7L p.a. Can i fill (RBI GRADE B) as OBC candidate now??? Please help me....
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If banks can borrow from RBI at repo rate then why would they use VRR, is there any limit for borrowing at repo rate and whether banks do not have to submit securities under VRR as collateral.
It is same as repo rate only difference is that rate is decided through auction or we can say demand decides the rate unlike repo where RBI decides the rate.
@@nirmaldogra96 Agreed, but my question is why there is need of VRR if funds can be borrowed through repo.
@@rahulbarnwal7339 for the same reason the shares are traded on stock markets. Means “Let them decide”.
There are two scenarios
1. Banks may not be willing to borrow at the fixed rate(repo) by RBI bcz it may be higher. But RBI still wants to lend in order to inject liquidity and it cannot wait for MPC meeting. So using VRR rates may turn out affordable by banks.
2. RBI may not want to lend to banks as there may be enough suppy in the economy which indicates that rates may be low as per demand. But when banks competing to borrow, rates(VRR) will increase.
Also one more reason I feel is that RBI can change repo rate only through MPC meeting which is held quarterly and VRR is overnight or maximum of 14 days. Or we can say Repo is permanent while VRR is temporarily used
Ps: This is what I have analysed by reading about it. Don’t completely rely upon it.
@@rahulbarnwal7339for the same reason stocks are traded on the stock market. Means “let them decide”
Also main reason I feel is that repo is change through mpc meet which is quarterly. VRR is overnight or max 14 days.
In order to control liquidity and inflation for short term VRR is used
There are two scenarios
1. RBI doesn’t want to lend as there is enough supply in the market and rates are low and RBI cannot wait for Mpc meeting. So banks competing to borrow will bid higher rates thus increasing the VRR, and injection for day or few may slow as it may be costlier for banks to borrow
2. Banks don’t want to borrow as rates are higher. VRR will turn out to be lower than repo in auction. Thus encouraging banks to borrow eventually Increasing the liquidity.
By VRR RBI just wants the market forces to control liquidity for a day or few and Repo rate being the primary one if changed by RBI many times will result in volatility and unstable environment domestically as well as globally.
Repo rate is observed by all financial players globally and if it is much volatile then they may loose confidence in Indian economy.
@@rahulbarnwal7339 because there is a limit on how much you can borrow keeping in mind vast amount of financial institutions
I don't find your spotlight chanel please help.
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Where can i find the pdf for this session?
Sir can we get the pdf notes of every this session?
Actually India is also implementing it's silver economy with Pradhan Mantri Abhyudaya Yojana (2021)
Woww
Jb already repo m int rate km h to bank usi channel se rupay borrow krega ...fir bid kahe krega .....jroorat kya
Sir can a upsc students prepare for this exam?
How tough it is to switch for this exam?
Sir please make available PYQ book OF RBI GRADE B as soon as possible
it is available in the course
Sir I belong to OBC NCL, now i cleared rrb po, if i join this post my family income will be above 7L p.a. Can i fill (RBI GRADE B) as OBC candidate now???
Please help me....
Gd mrning Sir
Please make a short video on weighted average call rate 🙏