Reserve Bank of India (RBI) has stated in its latest monthly update that banking system liquidity remained largely in surplus during the second half of November and December (up to 19th). Temporary increases in government cash balances due to GST related payments and an increase in currency-in-circulation led to some decline in system liquidity during the second half of November. The last tranche of CRR reduction, effective November 29, 2025 improved liquidity conditions till mid-December. System liquidity turned into deficit in the second half of December (up to 19th) on account of buildup in government cash balances due to advance tax payments. To offset the transient liquidity tightness, the Reserve Bank conducted variable rate repo auctions. With the aim of injecting durable liquidity into the system, the Reserve Bank conducted open market operation (OMO) purchases of government securities amounting to Rs 1 lakh crore and 3-year USD/INR Buy/Sell swaps of USD 5 billion in December.