Banking system liquidity surplus at lowest in FY27 on advanced tax outflows

Liquidity surplus fell to Rs 23,881 crore from Rs 1.5 trillion a day earlier as advance tax payments drained funds from the banking system

The liquidity in the banking system fell to its lowest in the current financial year, since March 26, 2026, due to advanced tax outflows, said market participants.

 

The surplus liquidity stood at 23,881 crore on Tuesday, against a surplus of ₹1.5 trillion on Monday, latest data by the Reserve Bank of India showed.  

 

“There was advanced tax outflow which led to the decline in liquidity,” said Gaura Sen Gupta, Economist at IDFC First Bank.

 

The weighted average call rate (WACR) settled at 5.35 per cent against previous day’s 5.36 per cent.

 

During the previous week, the WACR was trading around 5.25 per cent, near the policy repo rate.

 

The sharp decline in surplus liquidity follows a period of comfortable banking system liquidity, with surplus remaining above ₹1 trillion for the past three months.

 

The liquidity is expected to improve in the upcoming quarters on the back of RBI’s measures. A cumulative ₹4.5 trillion liquidity is expected by the end of the second quarter of the current financial year. 

 

“Strong inflow is expected in the banking system in the second quarter. The market estimate is ₹4.5 trillion. This will keep money market rates lower which had inched up earlier,” said a money market dealer at a state-owned bank.

 

Market participants said that the central bank might conduct additional Variable Rate Repo auctions during events of temporary liquidity crunch.