RBI Injects ₹48,014 Crore into Banking System Amid Liquidity Pressures

The Reserve Bank of India has recently infused ₹48,014 crore into the banking system through a variable rate repo auction. This action comes as liquidity tightens due to advance tax outflows, with market participants closely observing the situation. The infusion reflects a cautious demand amidst a significant drop in surplus liquidity, which has fallen sharply in recent days. As the financial year-end approaches, additional outflows related to GST payments are expected, further impacting liquidity conditions. Despite these challenges, overnight money market rates remain below the policy repo rate, indicating a relatively stable liquidity environment.

By Narendra Chaudhary Mar 18, 2026, 07:08 IST

RBI's Recent Liquidity Infusion

On Tuesday, the Reserve Bank of India (RBI) provided ₹48,014 crore to the banking sector via a seven-day variable rate repo (VRR) auction. This move comes as surplus liquidity has sharply decreased due to advance tax payments. The funds were allocated at a cut-off and weighted average rate of 5.26%. Notably, the amount absorbed was significantly less than the anticipated ₹1.5 lakh crore, indicating a cautious demand amidst tightening liquidity conditions following corporate tax settlements.

The VRR mechanism enables banks to secure short-term funds at rates determined by the market, assisting the central bank in managing temporary liquidity discrepancies and ensuring stability in the money markets. Looking ahead, liquidity is projected to tighten further due to additional outflows associated with upcoming GST payments. Market observers are monitoring the situation closely as seasonal tax pressures continue to impact system liquidity.

As of March 16, surplus liquidity was approximately ₹75,484 crore, a sharp decline from ₹2.08 lakh crore on March 15, highlighting the effects of advance tax outflows during the financial year-end. Since January 2026, the RBI has injected around ₹3.5 lakh crore of durable liquidity through open market operations (OMO), which is part of its broader strategy to stabilize funding conditions. Despite occasional tightening, overnight money market rates have remained below the policy repo rate, suggesting that overall liquidity conditions, while tightening, are still relatively manageable.