The Reserve Bank of India (RBI) showcased its dynamic liquidity management on May 30, 2025, with a series of money market operations that reflect the evolving needs of India’s financial system. As banks and the government navigated the close of the month, key figures and actions highlighted the central bank’s balancing act between stability and flexibility.
Key Highlights:
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Banks’ Cash Balances Surge: Scheduled commercial banks held cash balances of ₹9.63 trillion with the RBI on May 30, underscoring robust liquidity in the system as the fortnightly cash reserve requirement period concluded.
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Government Surplus for Auction: The Indian government’s surplus cash balance with the RBI, available for auction, stood at ₹87.21 billion. This surplus enables the government to efficiently manage its short-term funding needs while supporting market liquidity.
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Refinance and Borrowings: On May 30, the RBI provided ₹85.95 billion in refinance, offering banks additional resources to meet liquidity requirements. Meanwhile, Indian banks borrowed ₹13.81 billion through the Marginal Standing Facility (MSF), a safety valve for emergency funding against government securities, reflecting modest short-term pressure in the interbank market.
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Active Liquidity Management: The RBI continued to absorb and inject liquidity as needed, using tools like the Standing Deposit Facility (SDF), repo, and open market operations to maintain monetary stability and keep overnight rates in check. Recent days saw significant liquidity absorption and targeted injections to ensure smooth market functioning.
These operations underscore the RBI’s proactive stance in managing liquidity, supporting both government and banking sector needs, and reinforcing confidence in India’s financial markets.
Sources: The Week, HDFC Sky, Angel One