Mumbai: The Reserve Bank of India (RBI) absorbed Rs 1.10 lakh crore from the banking system on July 9, signalling that lenders continued to hold surplus liquidity despite active participation in the money market.

According to the RBI’s latest Money Market Operations data, the central bank used its liquidity management tools to absorb excess funds while simultaneously injecting liquidity where required to maintain stability in the financial system.

The figures indicate that liquidity conditions in the banking sector remain comfortable, supported by a healthy surplus of funds.

RBI absorbs surplus liquidity

The RBI absorbed Rs 1.67 lakh crore through the Standing Deposit Facility (SDF) at an interest rate of 5 per cent.

At the same time, it injected Rs 46,729 crore into the banking system through repo operations conducted at 5.26 per cent.

The combined effect of these operations resulted in a net liquidity absorption of Rs 1.20 lakh crore during the day. After taking into account outstanding liquidity facilities, the overall net liquidity absorption stood at Rs 1.10 lakh crore.

The central bank regularly conducts such operations to ensure adequate liquidity while maintaining stability in short-term interest rates.

Overnight money market remains active

Money market activity remained strong on July 9, reflecting continued demand for short-term funds among financial institutions.

According to the RBI data, the total value of transactions in the overnight money market reached Rs 6.91 lakh crore, with a weighted average interest rate of 5.28 per cent.

The triparty repo segment accounted for the largest share of trading activity at Rs 4.81 lakh crore.

This was followed by:

  • Market repo transactions: Rs 1.78 lakh crore
  • Call money transactions: Rs 24,893 crore

The robust trading volumes indicate active liquidity management by banks and other market participants.

Banks maintain healthy cash balances

The RBI data showed that banks maintained cash balances of Rs 7.88 lakh crore with the central bank as of July 9.

This was marginally lower than the average Cash Reserve Ratio (CRR) requirement of Rs 7.98 lakh crore for the fortnight ending July 15.

Banks are required to maintain a specified proportion of their deposits with the RBI as part of the statutory cash reserve requirement, which helps the central bank manage liquidity and monetary conditions.

Durable liquidity remains in surplus

The RBI also reported that the country’s net durable liquidity surplus stood at Rs 4.82 lakh crore as of June 15.

Durable liquidity reflects the longer-term availability of funds in the banking system and serves as an important indicator of overall financial conditions.

A sustained surplus generally suggests that banks have sufficient funds available to support lending activities and meet short-term funding requirements.

RBI continues active liquidity management

The latest figures highlight the RBI’s ongoing efforts to balance liquidity in the banking system through a combination of liquidity absorption and injection measures.

While surplus liquidity remains available with banks, the central bank continues to use instruments such as the Standing Deposit Facility and repo operations to ensure that money market interest rates remain aligned with the monetary policy framework.

The data indicates that India’s banking system continues to operate under comfortable liquidity conditions, supporting the smooth functioning of financial markets.