The Reserve Bank of India (RBI), in its latest monthly update, reported that system liquidity remained in surplus during April and into May (up to May 19, 2025), aided by the central bank’s proactive liquidity management efforts.
Despite this surplus, liquidity conditions came under some pressure in the latter half of April due to a build-up in government cash balances—driven by advance tax collections and GST-related outflows—as well as an increase in currency in circulation (CiC).
To ease these pressures, the RBI injected a total of Rs 1.68 lakh crore into the banking system between April 16 and May 19, 2025. This was carried out through one main 14-day Variable Rate Repo (VRR) auction and 21 fine-tuning VRR operations with tenures ranging from 1 to 4 days.
As a result, the average daily net absorption under the Liquidity Adjustment Facility (LAF) rose significantly to Rs 1.52 lakh crore during this period, compared to just ?0.26 lakh crore in the preceding month (March 16–April 15, 2025).
Since the beginning of the financial year (up to May 19, 2025), the RBI has infused a total of Rs 2.65 lakh crore into the system through open market operation (OMO) purchases and a 43-day term VRR auction.