At the end of March, the banking system’s liquidity situation turned surplus for the first time in three months, indicating that the Reserve Bank of India’s vigorous money infusion during the previous few months is starting to pay off.
On March 30, the banking system’s excess liquidity was Rs 89,399 crore. The liquidity was Rs 71,672 crore on March 29. The liquidity excess last occurred on December 15, when it was Rs 33,533 crore. The excess at the beginning of December was Rs 1 lakh crore.
The Reserve Bank of India (RBI) responded by aggressively selling dollars in order to support the rupee, which put strain on liquidity. Furthermore, advance tax and goods and services tax (GST) payments resulted in tax outflows.
The RBI unveiled a Rs 1.5-lakh-crore package in January that included dollar-rupee swaps, variable rate repo auctions, and purchases of government assets. Over the last three months, the central bank has infused more over Rs 5 lakh crore.
