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I came across following statement regarding Indian debt funds in ValueResearch ebook:

The RBI announced retracting ₹2 lakh crore of banking funds through a 14-day reverse-repo operation in January 2021. Effectively, banks were told to take money out of the debt market and park the surplus with the RBI. This sell-off in the debt market resulted in a fall in bond prices and hence a rise in the yields.

I know reverse repo rate is interest paid by RBI to banks. But what does it mean by "retracting ₹2 lakh crore of banking funds through a 14-day reverse-repo operation"? Why does it mean telling banks “to take money out of the debt market and park the surplus with the RBI"?

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The RBI VRRR is a variable reverse repo rate scheme.

By increasing VRRR, the RBI can force the banks to sell low yield debt and deposit excess cash with RBI.

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