RBI’s High-Stakes Liquidity Game: Who’s Borrowing, Who’s Banking, and What’s Next?

The Reserve Bank of India orchestrated a series of significant money market operations on May 28, 2025, reflecting its ongoing efforts to manage liquidity and ensure financial stability amid evolving market dynamics.

 

Key Takeaways

RBI’s recent liquidity absorption operations, including the use of the Standing Deposit Facility (SDF) and repo tools, have kept overnight market rates stable, with the weighted average hovering around 5.72 percent. The central bank continues to balance liquidity absorption and injection to maintain monetary stability.

 

Market Context

These operations come on the heels of a successful Treasury Bill auction that saw strong investor demand, reinforcing confidence in India’s short-term debt market. The RBI’s active management of liquidity, through both absorption and targeted injections, underscores its commitment to supporting economic growth while containing inflationary pressures.

 

Sources: The Week, HDFC Sky, PIB India