Surplus Surge: RBI Cash Pile of India Reaches ₹5.34 Trillion as Money Markets Remain Active

India's financial system experienced a strong liquidity posture on May 14, 2025, as the cash surplus held by the government at RBI was at a high of ₹5.34 trillion. This depicts the continued trend of high liquidity in the banking industry, supported by high RBI surplus transfer and cautious fiscal policy.

 

Government's Surplus Cash:

As of May 14, the Indian government's surplus cash balance deposited with the RBI stood at ₹5.34 trillion, ready for auction. This large buffer indicates the Centre's enhanced fiscal health and augurs well for its capability to fulfill expenditure requirements without such urgent borrowing pressure.

 

Refinancing Operations:

On the same date, the RBI supplied ₹77.18 billion in refinancing, providing seamless liquidity to financial institutions and ensuring money market stability.

 

Marginal Standing Facility (MSF) Take-up:

Indian banks borrowed through the MSF window to the tune of ₹1.75 billion, signaling weak overnight liquidity needs and good short-term management of liquidity by the banking sector.

 

Money Market Trends:

The RBI’s active money market operations, including repo and reverse repo transactions, continue to fine-tune liquidity. Elevated surplus levels are partly attributed to the central bank’s record surplus transfer to the government, which is expected to exceed ₹2.2–3.1 trillion in FY25, driven by strong forex gains and interest income.

 

Impact on Fiscal Management:

The excess funds and increased RBI transfers are likely to assist the government in cutting its fiscal deficit, curbing borrowing, and possibly raising capital expenditure, helping to spur economic growth.

 

Sources: Economic Times, Business Standard, The Week