{
  "id": 12612620,
  "title": "India bank liquidity surplus likely to decline by financial year-end, RBI Chief says",
  "url": "https://urgent.news/2026/10/07/india-bank-liquidity-surplus-likely-to-decline-by-financial-year-end",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-07T10:53:20.000Z",
  "source": {
    "name": "Business Recorder",
    "slug": "business-recorder",
    "url": "https://www.brecorder.com/news/40443095/india-bank-liquidity-surplus-likely-to-decline-by-financial-year-end-rbi-chief-says"
  },
  "original_language": "en",
  "account": "Mumbai: Reserve Bank of India Governor Sanjay Malhotra revealed on Wednesday that India's banking system liquidity surplus is unlikely to persist beyond the current financial year. The surplus, currently averaging 7.3 trillion rupees (approximately $75.49 billion) or 2.7% of deposits since mid-September, has been primarily fueled by $144 billion of dollar inflows as one-off schemes near completion. \"Today the surplus liquidity is much more than required... it is not very long that we expect these surplus liquidity conditions to last,\" Malhotra stated at a press conference following a 25 basis point increase in India's benchmark repo rate in nearly four years. The RBI governor anticipates a significant absorption of this excess liquidity within the current financial year due to natural factors like \"currency leakage,\" reserve requirements by banks, and through central bank operations such as sell/buy swaps, reverse variable rate repos, open market bond sales, and spot currency interventions. The surplus liquidity poses risks of fueling inflation, maintaining low short-term borrowing costs, and obstructing the central bank's transmission of interest rate increases. Apart from the rate hike, the RBI altered its policy stance to calibrated tightening, without announcing specific liquidity measures, suggesting the ongoing approach will involve managing liquidity via the VRRR route. Market participants had previously expected a potential hike in the cash reserve ratio (CRR) to withdraw liquidity and ensure the central bank's rate hike is effectively transmitted. However, Malhotra clarified that a CRR hike is one of the least preferred methods to reduce cash reserves. Last month, the RBI conducted open market operations worth 1 trillion Indian rupees ($10.34 billion), making this financial year's sales the highest in over a decade.",
  "summary": "MUMBAI: A sharp surge in India’s banking system liquidity will not be a long-term phenomenon, with most of the funds likely to be used up by the end of the financial year through various means, the central bank chief said on Wednesday. The liquidity surplus in India’s banking system has averaged 7.3 trillion rupees ($75.49 billion), or nearly 2.7% of deposits since the start of September,…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}