Image Source: Mint
India’s money market operations on July 1, 2025, revealed a cautious liquidity environment, with banks maintaining high cash reserves while also drawing on the Reserve Bank of India’s (RBI) emergency lending facility.
Key Highlights:
Banks’ cash balances with the RBI stood at a robust ₹10.07 trillion, reflecting strong reserve maintenance by scheduled commercial banks.
The Government of India’s surplus cash balance with the RBI was nil, indicating active deployment of funds or pending disbursements.
The RBI provided ₹72.47 billion in refinance operations, supporting short-term liquidity needs.
Banks borrowed ₹12.33 billion via the Marginal Standing Facility (MSF), a sign of tight liquidity or end-of-day funding mismatches.
The RBI’s Liquidity Adjustment Facility (LAF) and Standing Deposit Facility (SDF) operations continued to absorb excess liquidity, with net absorption exceeding ₹2.6 trillion as of June 30.
These figures come as the RBI’s extended call money market hours—now running from 9 AM to 7 PM—took effect on July 1, aiming to improve liquidity management and price discovery.
The data paints a picture of a system balancing ample reserves with selective stress pockets, as banks navigate evolving monetary conditions and fiscal flows.
Source: Reuters, RBI, The Week
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