RBI’s Liquidity Lifeline: Banks Flush with ₹9.51 Trillion as Money Markets Stay Buoyant!

The Reserve Bank of India (RBI) maintained a steady hand on liquidity as of May 29, 2025, with the latest money market operations reflecting a robust and well-managed financial system. Banks’ cash balances with the RBI stood at a substantial ₹9.51 trillion, signaling ample liquidity to support credit growth and economic activity.

 

Key Highlights:

 

The government’s surplus cash balance with the RBI available for auction was ₹33.35 billion on May 29, indicating prudent fiscal management and efficient cash flow operations.

 

On the same day, the RBI provided ₹85.95 billion in refinance, ensuring banks had access to short-term funding and reinforcing market stability.

 

Indian banks borrowed ₹10.62 billion via the RBI’s liquidity facilities, a modest figure that underscores the prevailing surplus in the banking system.

 

The RBI’s annual report for 2024-25 emphasized its commitment to liquidity management in line with its accommodative monetary policy stance. With inflation falling below target and headline inflation averaging 4.6% for the year, the central bank has room to support growth while maintaining financial stability.

 

The central bank continues to deploy a mix of instruments—open market operations, variable rate repos, and standing facilities—to modulate both frictional and durable liquidity, ensuring orderly money market rates.

 

Liquidity conditions have remained in surplus throughout 2025, with the RBI’s proactive measures, including repo rate cuts and CRR reductions, further strengthening the system’s resilience.

 

These developments highlight the RBI’s effective stewardship of the money market, balancing growth support with inflation control and keeping the financial system on a stable footing.

 

Sources: IANS, DD News, HDFC Sky