RBI Injects Short-term Liquidity Amidst Uneven Banking Landscape

The Reserve Bank of India injected Rs 25,101 crore into the banking system via a three-day variable rate repo auction, despite estimating a surplus of Rs 16,875.36 crore. The uneven liquidity distribution suggests banks prefer parking funds in the Standing Deposit Facility amid tight liquidity conditions.

The Reserve Bank of India (RBI) has undertaken a strategic move to ease liquidity constraints by injecting Rs 25,101 crore into the banking system. This injection was facilitated through a three-day variable rate repo (VRR) auction, contrasting the notified amount of Rs 75,000 crore.

Despite a sharp decline in surplus liquidity due to advance tax payments, the banking sector witnessed a lower subscription in the VRR auction. This indicates an uneven distribution of liquidity, as banks now show a tendency to place larger funds in the Standing Deposit Facility.

As per March 19 estimates, liquidity in the banking system remains in surplus by Rs 16,875.36 crore. This action follows a recent Rs 48,014 crore liquidity infusion via a seven-day VRR by the RBI, which has injected Rs 3.50 lakh crore into the system through open market operations since January 2026.

(With inputs from agencies.)