RBI Signals Tightening Liquidity Grip: Banks' Cash Dips Amid Minimal Borrowing

Liquidity Snapshot

The Reserve Bank of India (RBI) disclosed key liquidity metrics for December 3, 2025, reflecting a nuanced shift in banking system funds. Banks' cash balances with the central bank stood at ₹7.29 trillion, down from recent highs amid ongoing CRR cuts injecting durable liquidity. Government's surplus cash balance available for auction was nil, signaling full deployment into the system and easing surplus pressures. This comes as RBI actively manages excess via VRRR auctions, with recent operations absorbing significant funds.​

Key Highlights

Banks' Cash Balances: ₹7.29 trillion on Dec 3, lower than prior days' peaks (e.g., ₹7.45 trillion earlier), amid CRR reductions releasing ~₹660 billion.​

Government Surplus: Nil for auction, implying complete spending or transfers boosting banking liquidity.​

Refinance Facility: RBI provided ₹82.78 billion, supporting short-term needs without major strain.​

MSF Borrowing: Minimal at ₹8.06 billion via Marginal Standing Facility, the penal overnight window, versus higher past usage (e.g., ₹8.33 billion).​

Sources: Reuters (RTRS), RBI