Banking Liquidity

Advance tax payments and higher currency leakage pushed banking system liquidity into deficit, prompting the RBI to inject Rs 1.41 trillion through a VRR auction

Surplus liquidity in the banking system narrowed sharply to its lowest level in nearly three months, weighed down by advance tax outflows, despite liquidity support measures undertaken by the Reserve Bank of India (RBI). According to Reserve Bank of India (RBI) data analysed by PTI, surplus liquidity in the banking system dropped sharply to Rs 4,772.21 crore on June 17, from Rs 23,881.21 crore on June 16. The liquidity surplus reported on June 17 was the lowest level since March 22, 2026, when the banking system was in a liquidity deficit of Rs 65,395.64 crore, the RBI data shows. Experts attributed the narrowing of liquidity to outflows on account of advance tax payments. Further, they added that the central bank may conduct more VRR (variable rate repo) auctions in the coming days to support liquidity in the banking system. The tightening liquidity conditions have pushed the weighted average call money rate above the RBI's repo rate of 5.25 per cent. To ease liquidity pressures

The Reserve Bank of India (RBI) on Friday injected Rs 81,590 crore transient liquidity into the banking system through a three-day variable rate repo (VRR) auction. Transient liquidity is temporary cash flow fluctuations in a financial or banking system, while a Variable Rate Repo (VRR) auction is a monetary tool used by the RBI to inject short-term liquidity into the banking system. In a release the RBI said the funds were infused at a 5.26 per cent cut-off rate. The demand for funds still remained lower than the notified amount of Rs 1 lakh crore despite the sharp drop in liquidity surplus in the banking system. However, in comparison with the previous auction conducted on May 21, the demand is higher from banks in Friday's auction. Currently, the liquidity in the banking system is estimated to be in surplus of around Rs 58,876.29 crore as on May 21, as compared to Rs 1.51 lakh crore as on May 20. The tightness in the liquidity surplus has led to a sharp uptick in the overnight

Banks bid far below the notified amount at the RBI's short-term repo auction as surplus liquidity reduced the need for additional funds

The Reserve Bank of India (RBI) on Friday pulled out Rs 2,00,031 crore transient liquidity from the banking system through a seven-day variable rate reverse repo (VRRR) auction. The central bank had received higher bids worth Rs 2,28,098 crore than the notified amount of Rs 2 lakh crore in the auction. The RBI accepted the bid at a 5.24 per cent cut-off rate and 5.23 per cent weighted average rate. Currently, the liquidity in the banking system is estimated to be in surplus of around Rs 4.09 lakh crore. Before this, the central bank had conducted a seven-day VRRR auction on April 10 and pulled out Rs 2,00,041 crore of transient liquidity from the banking system. These funds were reversed today into the banking system. "Going ahead, we will continue to be proactive and pre-emptive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy," RBI Governor Sanjay Malhotra said during the April monetary policy.

Surplus liquidity in the banking system remained above Rs 5 trillion for the fifth straight day, supported by government spending and bond redemptions

Data from the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi), and the World Bank suggests that India is a global outlier in the relative size of our credit markets

Spot intervention ​drains rupee liquidity, an effect the RBI can counter through dollar/rupee buy-sell FX swaps, in which the first leg is settled at the spot date and the second at a future date

With liquidity easing, valuations normalising and earnings turning upward, India enters 2026 primed for selective outperformance - led by banks, consumption and smallcaps

As deposit growth lags credit expansion, Indian banks face shrinking low-cost Casa inflows, rising funding costs, and structural shifts driven by UPI, e-Kuber, and digital savings trends

The net liquidity in the banking system has remained in deficit mode for four consecutive days. The system liquidity was in a deficit of Rs 2,645 crore on Thursday, the latest data by the RBI showed

The policy, called fixed rate liquidity operations, will help banks manage their needs better, several bankers proposed to the RBI in meetings held over the last few months

Liquidity jumps on government spending and surplus transfer; RBI gets ₹1.7 tn bids at 7-day VRRR, with cut-off at 5.47%; experts see preference for shorter operations

The Reserve Bank of India will conduct a seven-day variable rate reverse repo (VRRR), for Rs 1 trillion ($11.64 billion) on Friday, its first such operation since November-end

RBI Governor also called banks and primary dealers for their active roles to improve liquidity and pricing for participants like cooperative banks, pension and provident funds with smaller deal sizes

RBI has moved liquidity into the surplus side from a deficit four months ago, and some experts feel it may be preparing for monetary transmission before it cuts the repo rate again next week

Reserve Bank of India is scheduled to meet bank economists on April 3 to take feedback on proposed revisions

The reversal of rules follows the central bank's decision to defer proposals to increase the capital that banks set aside for new project loans and liquidity they hold for digital deposits

RBI Governor Sanjay Malhotra says market determines rupee depreciation, touches on necessary regulations surrounding cryptocurrency

Indian banks' loan growth has moderated for six straight months through December as the liquidity constraints forced lenders to focus on boosting deposits, instead of issuing credit