Banking liquidity surplus hits near 3-month low after advance tax outflows

Surplus liquidity in the banking system narrowed sharply to its lowest level in nearly three months, weighed down by advance tax outflows, despite liquidity support measures undertaken by the Reserve Bank of India (RBI). According to Reserve Bank of India (RBI) data analysed by PTI, surplus liquidity in the banking system dropped sharply to Rs 4,772.21 crore on June 17, from Rs 23,881.21 crore on June 16. The liquidity surplus reported on June 17 was the lowest level since March 22, 2026, when the banking system was in a liquidity deficit of Rs 65,395.64 crore, the RBI data shows. Experts attributed the narrowing of liquidity to outflows on account of advance tax payments.

Further, they added that the central bank may conduct more VRR (variable rate repo) auctions in the coming days to support liquidity in the banking system. The tightening liquidity conditions have pushed the weighted average call money rate above the RBI's repo rate of 5.25 per cent. To ease liquidity pressures and keep overnight money market rates in check, the central bank has infused transient liquidity of about Rs 1.89 lakh crore through variable VRR auctions of different tenures over the past few days. Of the total infusion, the RBI injected Rs 72,300 crore on Wednesday through two VRR auctions, Rs 89,440 crore via a seven-day VRR auction on June 16, and Rs 28,220 crore through an overnight VRR auction on June 15, according to RBI data.