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The Reserve Bank of India infused INR 65,322 crore into the banking system through a short-term variable rate repo auction to manage liquidity pressures. The move comes amid fluctuations caused by advance tax payments and GST outflows, which have impacted surplus liquidity levels. Despite a lower-than-notified infusion, the banking system remains in surplus. In recent days, the RBI has actively used VRR auctions to inject over INR 2.08 lakh crore, alongside durable liquidity support through open market operations since January 2026, reflecting its continued efforts to maintain stability in money markets.
The Reserve Bank of India infused INR 65,322 crore into the banking system through a six-day variable rate repo (VRR) auction conducted on Friday. This step was taken to manage short-term liquidity requirements in the financial system. Advertisement
According to the central bank, the funds were injected at a cut-off rate of 5.26 per cent, while the weighted average rate stood at 5.29 per cent. The amount infused was lower than the notified INR 75,000 crore, even though liquidity conditions have seen pressure due to advance tax payments and GST-related outflows.
System liquidity, however, remained in surplus. Data showed that the surplus stood at around INR 48,698.38 crore as of the previous day, indicating that despite recent outflows, the banking system continues to have adequate funds.
Over the past few days, the RBI has been actively using VRR auctions of different tenures to address short-term liquidity needs. These operations have collectively added INR 2,08,208 crore into the system, showing a calibrated approach to managing temporary liquidity mismatches.
Apart from these short-term measures, the central bank has also taken steps to ensure durable liquidity. Since January 2026, it has infused INR 3.50 lakh crore through open market operations (OMO) by purchasing government securities. This indicates a broader strategy to maintain sufficient liquidity while ensuring stability in financial markets.
The recent liquidity actions highlight how the RBI is balancing short-term adjustments with long-term measures. While temporary factors such as tax outflows continue to affect liquidity levels, the central bank?s interventions aim to prevent any disruption in credit flow and overall market functioning.
Source PTI
FAQ
Q1: What action has the RBI taken to manage liquidity?
Reserve Bank of India has infused INR 65,322 crore into the banking system through a six-day variable rate repo (VRR) auction to address short-term liquidity requirements and maintain stability in money markets.
Q2: At what rates was the liquidity infusion carried out?
The funds were injected at a cut-off rate of 5.26 per cent and a weighted average rate of 5.29 per cent, reflecting prevailing short-term interest rate conditions in the market.
Q3: Why was liquidity under pressure in the banking system?
Liquidity levels were impacted due to advance tax payments and GST-related outflows, which typically lead to temporary withdrawal of funds from the banking system.
Q4: Did the RBI infuse the full notified amount?
No, the RBI infused INR 65,322 crore, which was lower than the notified INR 75,000 crore, indicating that demand from banks during the auction was relatively lower than the available amount.
Q5: What is the current liquidity position in the system?
Despite recent outflows, the banking system continues to remain in surplus, with liquidity estimated at around INR 48,698.38 crore, suggesting adequate availability of funds overall.
Q6: What other liquidity measures has the RBI taken recently?
In recent days, the RBI has injected over INR 2,08,208 crore through multiple VRR auctions of different maturities, showing a consistent effort to manage short-term liquidity fluctuations.
Q7: How is the RBI managing long-term liquidity conditions?
Along with short-term measures, the RBI has infused around INR 3.50 lakh crore since January 2026 through open market operations (OMO), indicating a balanced approach to ensuring both immediate and durable liquidity support in the financial system.
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