RBI Absorbs Up ₹2.23 Lakh Crore Through SDF and Liquidity Operations on May 27
By Ankur Chandra | Updated at: May 31, 2025 10:46 PM IST
Mumbai, May 28, 2025: The Reserve Bank of India (RBI) absorbed ₹2.23 lakh crore in liquidity from the banking system on May 27, 2025, deploying a mix of tools under its liquidity management framework. This move highlights the central bank’s continued efforts to maintain monetary stability amid dynamic liquidity conditions.
As per the RBI’s Money Market Operations report, the bulk of the absorption, ₹2,27,421 crore, was conducted through the Standing Deposit Facility (SDF) at an interest rate of 5.75%. In contrast, marginal lending via the Marginal Standing Facility (MSF) stood at ₹902 crore at a higher rate of 6.25%. Additionally, a one-day variable rate repo of ₹3,542 crore was conducted at a rate of 6.01%.
RBI’s Liquidity Tools Explained:
- Standing Deposit Facility (SDF): Enables the RBI to absorb surplus liquidity without requiring collateral, offering banks a safe overnight option.
- Marginal Standing Facility (MSF): Allows banks to borrow emergency funds at a penal rate using government securities.
- Repo/Reverse Repo: Under repo, the RBI lends against collateral; reverse repo is used to absorb liquidity.
- Market/Triparty Repos: Collateral-backed short-term instruments for managing interbank funds.
Money Market Activity Details – May 27, 2025
| Segment | Volume (₹ Cr) | Wt. Avg Rate (%) | Rate Range (%) |
|---|---|---|---|
| Overnight Total | 5,94,972.31 | 5.72 | 0.01 – 6.60 |
| Call Money | 16,118.89 | 5.80 | 4.85 – 5.85 |
| Triparty Repo | 4,02,086.45 | 5.70 | 5.00 – 5.76 |
| Market Repo | 1,74,981.97 | 5.73 | 0.01 – 6.60 |
| Corporate Bond Repo | 1,785.00 | 5.90 | 5.90 – 5.95 |
Despite robust overnight volumes, term lending remained subdued, signalling adequate short-term liquidity.
Liquidity Position Overview
- Net Liquidity Absorbed (May 27): ₹2,22,977 crore
- Outstanding Liquidity Injection: ₹34,466 crore
- Total Net Absorption: ₹1,88,510 crore
- SLF Utilisation: ₹8,735 crore
- Cash Balance with RBI: ₹9,41,647 crore
- CRR Requirement (till May 30): ₹9,48,817 crore
Strategic Takeaway
The RBI’s operations reflect a calibrated approach to liquidity management. With high SDF usage and minimal MSF borrowing, the central bank is ensuring short-term interest rates align with the repo rate while carefully balancing inflation control and credit support.
Bottom Line
On May 27, the RBI aggressively absorbed excess liquidity, underscoring its proactive stance to maintain financial market stability and align interest rates.
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REF: https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR419MMOF6B6781AA3004C8D8B5A08D66EF02014.PDF
