Image Source: Business Standard
The Reserve Bank of India (RBI) reported a steady liquidity position in the banking system as of April 25, 2025, with active money market operations and no signs of stress despite ongoing global uncertainties.
Key Highlights:
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Banks’ Cash Balances: Indian banks held cash balances totaling ₹9.54 trillion with the RBI, reflecting ample liquidity in the system.
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Government Surplus: The central government’s surplus cash balance with the RBI available for auction stood at ₹69.47 billion, indicating healthy fiscal management and no immediate cash crunch.
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RBI Refinance Operations: The RBI provided ₹100.31 billion in refinance, supporting short-term liquidity needs for banks.
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Marginal Standing Facility (MSF): Banks borrowed a modest ₹1.98 billion via the MSF window, a facility used for emergency overnight liquidity. The current MSF rate stands at 6.25%, just above the repo rate of 6.00%, underscoring that banks are not facing acute liquidity shortages.
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Policy Context: The RBI recently cut the repo rate by 25 basis points to 6%, aiming to stimulate lending and investment amid global trade tensions and softening inflation. The central bank continues to actively manage liquidity through open market operations and regular auctions, ensuring stability in the money market.
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Liquidity Outlook: Despite expectations of a shift from surplus to deficit in the coming days, current operations show the system remains well-cushioned, with the RBI poised to intervene as needed.
The overall picture suggests that India’s banking sector is operating with comfortable liquidity, and the RBI’s proactive stance is keeping the money market stable.
Sources: Reuters, Trading Economics, Bajaj Housing Finance, Economic Times, ClearTax
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