Banking system liquidity turns deficit nearly after two months despite RBI’s support

Liquidity

The liquidity in the banking system turned deficit today nearly after two months despite the continuous support provided by the Reserve Bank of India (RBI) through variable rate repo (VRR) auctions, Open Market Operation (OMO) purchases of government securities and USD/INR Buy/Sell swap auction.

Experts attributed this to the outflows of funds on account of advance tax payments and redemption from the mutual funds.

According to the RBI’s data, banking system liquidity stood at Rs 60,787.81 crore deficit as on December 17. This marks a deficit after October 28, 2025, when the deficit stood at Rs 8,083.79 crore.

This is the third instance in this fiscal year, when the liquidity has turned deficit in the banking system. Prior to this, the deficit was marked in late October, and on September 22.

The liquidity was also in deficit on March 28, 2025, of Rs 9,354.09 crore, RBI data showed.

The central bank during the December monetary policy announced OMO purchase auctions of Government of India securities for an aggregate amount of Rs 1 lakh crore in two tranches of Rs 50,000 crore each. Further, a USD/INR Buy/Sell Swap auction of $5 billion for a tenor of three years.

Around Rs 1 lakh crore liquidity has been infused in the banking system, of which Rs 50,000 crore was infused through first tranche of OMO purchases and USD/INR Buy/Sell swap auction.

Additionally, the central bank infused Rs 2.09 lakh crore liquidity through VRR auction in this week.

The further liquidity will be infused via another tranche of OMO purchases of Rs 50,000 crore, which is scheduled to be held on December 18.