Confidence Restored in Money Markets After RBI injects ₹5.53 lakh crore: Finance Ministry

The Reserve Bank of India’s (RBI) sustained liquidity operations in the fourth quarter of the current financial year have successfully eased liquidity stress, restoring stability and confidence in money markets, the Finance Ministry observed on Wednesday, March 26.

The RBI injected a cumulative ₹4.73 lakh crore into the banking system by early March via Open Market Operations (OMOs), forex swaps, and variable rate repos (VRRs).

These measures were aimed at addressing liquidity pressures stemming from advance tax outflows and forex interventions by the regulator to manage the INR volatility.

As a result, by March 4, the systemic liquidity deficit had narrowed sharply to just ₹20,416 crore from ₹3.1 lakh crore in January, the Finance Ministry observed.

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The improvement was reflected in the interbank call rate, which had spiked to 6.74% in January amid acute liquidity stress but gradually aligned with the policy repo rate of 6.25% by mid-March, signaling a restored balance between liquidity demand and supply.

“This alignment underscored the restored confidence in interbank markets, as RBI’s liquidity support offset pressures from tax outflows and forex interventions,” the Finance Ministry noted in its monthly economic review.

As the Financial Year draws to a close, the RBI’s efforts appear to have effectively restored calm in money markets, ensuring that liquidity conditions remain conducive for economic growth while maintaining overall market stability.

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(Edited by : Ajay Vaishnav)

First Published: Mar 26, 2025 5:52 PM IST

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