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The Reserve Bank of India injected INR 79,256 crore of transient liquidity into the banking system through an overnight variable rate repo (VRR) auction at a cut-off and weighted average rate of 5.26 per cent. The infusion came in lower than the notified INR 1 lakh crore despite a decline in surplus liquidity, mainly due to advance tax outflows. Liquidity in the system is currently estimated to be in deficit. The central bank has also conducted multiple VRR operations earlier this week to manage short-term liquidity conditions.
The Reserve Bank of India has infused INR 79,256 crore of transient liquidity into the banking system through an overnight variable rate repo (VRR) auction conducted on Monday. The funds were injected at a cut-off and weighted average rate of 5.26 per cent, as stated in an official release by the central bank. Advertisement
The liquidity infusion was lower than the notified amount of INR 1 lakh crore, even as surplus liquidity in the banking system declined sharply. The reduction in surplus is attributed largely to advance tax payments, which temporarily tighten liquidity conditions in the system.
At present, overall liquidity in the banking system is estimated to be in deficit of about INR 65,395.64 crore as of March 23. To manage short-term requirements, the central bank has been actively conducting variable rate repo operations over the past few days.
Earlier in the week, the Reserve Bank infused INR 25,101 crore through a three-day VRR auction, while another INR 48,014 crore was injected through a seven-day VRR operation conducted previously. These measures reflect the central bank's ongoing efforts to address short-term liquidity mismatches in the banking system.
In addition to transient liquidity operations, the Reserve Bank has also provided durable liquidity through open market operations. Since January 2026, it has infused around INR 3.50 lakh crore into the system by purchasing government securities, supporting overall liquidity conditions and ensuring smoother functioning of financial markets.
Source PTI
FAQ
Q1: How much liquidity did the RBI inject into the banking system?
The Reserve Bank of India (RBI) injected INR 79,256 crore of transient liquidity into the banking system through an overnight variable rate repo (VRR) auction. The infusion was aimed at addressing short-term liquidity needs in the financial system.
Q2: At what rate was the liquidity provided?
The funds were injected at a cut-off and weighted average rate of 5.26 per cent, as part of the overnight VRR auction conducted by the central bank.
Q3: Why was the liquidity infusion lower than the notified amount?
Although the RBI had notified an amount of INR 1 lakh crore, the actual demand from banks was lower. This happened despite a decline in surplus liquidity, mainly due to advance tax outflows that temporarily tightened liquidity conditions.
Q4: What is the current liquidity position in the banking system?
As of March 23, the banking system is estimated to be in a liquidity deficit of about INR 65,395.64 crore. This reflects tighter conditions compared to earlier surplus levels.
Q5: What steps has the RBI taken recently to manage liquidity?
The RBI has conducted multiple VRR operations over the past few days, including a three-day VRR infusion of INR 25,101 crore and a seven-day operation of INR 48,014 crore, to manage short-term liquidity mismatches.
Q6: What is the difference between transient and durable liquidity support?
Transient liquidity is provided through short-term tools like VRR auctions to meet immediate needs, while durable liquidity is injected through measures like open market operations (OMO), which involve buying government securities.
Q7: How much durable liquidity has the RBI injected recently?
Since January 2026, the RBI has infused around INR 3.50 lakh crore into the system through open market operations, helping support overall liquidity and maintain smooth functioning of financial markets.
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