Liquidity

Central bank absorbs surplus liquidity as banks bid Rs 2.28 trillion in VRRR auction, reflecting robust demand amid easing liquidity conditions

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.

RBI to conduct Rs 2 trillion variable rate reverse repo auction to absorb surplus liquidity, with banking system surplus remaining above Rs 5 trillion

Despite a headline liquidity surplus, India's banking system faces tightening funding conditions, rising short-term rates, and persistent external pressures weighing on liquidity

RBI drains Rs 2 trillion surplus liquidity through VRRR auction, its first in four months, pushing bond yields higher amid excess liquidity in banking system

The Reserve Bank of India on Friday said it will conduct a variable rate reverse repo auction for ₹2 trillion ($21.58 billion), its first such operation in four months

Move expected to improve liquidity and price discovery, though borrowing costs may remain aligned with commercial paper rates due to credit profile differences

Banking liquidity hits four-year high on G-sec maturities, with surplus nearing ₹5 trillion and call rates softening as RBI signals continued proactive support

RBI allows NBFCs, corporates and AIFIs to participate in term money market to deepen liquidity, improve price discovery and strengthen policy transmission

RBI maintained that the weighted ​average call rate (WACR) is its operative rate, and it aims to keep ‌it as close to the policy repo rate as possible

RBI's Benchmark Issuance Strategy seeks to improve liquidity, transparency and price discovery in SDL market, though impact on borrowing costs may take time

Margin pressure for Indian banks could increase, as the Reserve Bank of India's (RBI) flexibility to inject local-currency liquidity into the banking system has narrowed amid efforts to contain rupee volatility, a report said on Thursday. However, banks' direct foreign-currency risks remain limited, Fitch Ratings said in a report. "Sector margins could decline by 20-30 bps below our current 3.1 per cent forecast for the financial year ending March 31, 2027 (FY27) if higher funding costs linked to Middle East tensions persist. This could reduce operating profit/risk-weighted assets (RWAs) - our core earnings metric - by around 30-40bps, from our 2.5 per cent forecast for FY27," it said. The base case assumed deposit costs would decline in FY27 as accommodative liquidity would enable further transmission of the RBI's 125 bps of policy rate cuts since December 2024; only 44 bps have been passed through to deposit rates as of January 2026, due to intensified competition for deposits wit

Central bank holds additional ₹50,000 crore VRR auction as banks face year-end liquidity pressures, with demand exceeding notified amounts due to balance sheet adjustments

RBI's bond purchases and switch operations are helping banks cushion treasury losses in Q4 despite rising yields driven by global volatility and the West Asia crisis

Central bank rejects all bids at weekly auction, aiming to avoid signalling higher yields and support liquidity ahead of financial year-end

Banking system liquidity slipped into deficit after two months due to tax and GST outflows, though experts expect a return to surplus in early April

Liquidity surplus narrows amid advance tax outflows and GST payments, while muted demand seen in RBI's VRR auctions and short-term borrowing shifts to TREPS market

RBI will purchase Rs 50,000 crore of government bonds through an open market operation auction on Friday as part of its liquidity infusion measures

The Reserve Bank of India (RBI) on Monday injected Rs 50,000 crore into the banking system through Open Market Operation (OMO) purchases of government securities, according to a release. The Central bank purchased 6.33 per cent GS (Government Security) 2035 bonds worth Rs 13,507 crore, 6.01 per cent GS 2030 worth Rs 13,494 crore, 6.10 per cent GS 2031 of Rs 8,157 crore, 7.30 per cent GS 2053 of Rs 6,955 crore, 7.18 per cent GS 2033 worth Rs 4,479 crore, 6.92 per cent GS 2039 of Rs 2,304 crore, and 6.19 per cent GS 2034 of Rs 1,104 crore, it said. The liquidity in the banking system, currently, is estimated to be in surplus of around Rs 2.41 lakh crore. The OMO purchase auction was announced ahead of expected heavy outflows from the banking system due to advance tax and Goods and Services Tax (GST) payments scheduled later this month. This comes even as liquidity conditions in the banking system currently remain in a significant surplus of Rs 3.02 lakh crore. As per RBI data, it has

The RBI has announced Rs 1 trillion in OMO purchases to cushion tightening from advance tax outflows, even as broader pressures on durable liquidity persist due to forex interventions