(06 Jun 2025, 12:33)

Total amount of Rs 9.5 lakh crore of durable liquidity was injected into banking system since January

The Reserve Bank of India (RBI) has stated today that a total amount of Rs 9.5 lakh crore of durable liquidity was injected into the banking system since January. As a result, after remaining in deficit since mid-December, liquidity conditions transitioned to surplus at the end of March. This is also evident from the tepid response to daily variable Repo Rate auctions and high Standing Deposit Facility balances – the average daily balance during April-May amounted to Rs 2.0 lakh crore. Reflecting the improvement in liquidity conditions, the weighted average call rate (WACR) – the operating target of monetary policy – traded at the lower end of the Liquidity Adjustment Facility (LAF) corridor since the last policy. The comfortable liquidity surplus in the banking system has further reinforced transmission of policy repo rate cuts to short term rates. However, we are yet to see a perceptible transmission in the credit market segment, though we must keep in mind that it happens with some lag, the central bank noted.

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Total amount of Rs 9.5 lakh crore of durable liquidity was injected into banking system since January