Reserve Bank of India Reports Four Lakh Crore Rupee Net Liquidity Absorption in Money Markets
Why it matters
Money market operations are the daily interventions by the RBI to keep interest rates aligned with its policy objectives. The liquidity position is managed through the Liquidity Adjustment Facility (LAF), which includes instruments like the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF). The SDF, introduced in 2022, allows banks to park excess funds without collateral at a rate below the repo rate. The current data reflects a period of significant surplus liquidity, as evidenced by the high absorption through the SDF (₹2,95,709 crore) on a single day.
These operations are significant for finance professionals and banking exam candidates as they show how the RBI maintains the price of money (interest rates). The net durable liquidity surplus of ₹5,06,806 crore as of March 31, 2026, provides the backdrop for these daily operations. The immediate consequence of these high absorption levels is that the Call Money rate, which is the rate at which banks lend to each other overnight, remained at 5.09%, within the policy corridor. This ensures that the monetary policy transmission is effective and that inflation-targeting remains on track by preventing excessive money supply from driving up prices.
- Net Liquidity Injection/Absorption : -₹4,09,493.86 crore
- SDF Operations : ₹2,95,709.00 crore
- MSF Operations : ₹159.00 crore
- Weighted Average Call Rate : 5.09%
Glossary
Standing Deposit Facility (SDF): A collateral-free liquidity absorption mechanism used by the RBI.
Marginal Standing Facility (MSF): A window for banks to borrow from the RBI in an emergency when inter-bank liquidity dries up.