Markets pin hope on RBI as rupee defence, festive flush strain liquidity

The need for RBI action is heightened by the fact that benefits from the cut in cash reserve ratio (CRR)—the percentage of a bank’s total deposits that must be kept with the RBI in cash—earlier this year, with two tranches of ₹62,500 crore each released already, have largely been offset by heavy outflows of rupee liquidity.

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The CRR cut was offset by heavy outflows of rupee liquidity.

(MINT)

“Even after assuming no further drain from forex intervention in the remainder of fiscal year 2026 (FY26), there could be a need for durable liquidity infusion at the end of Q3 FY26,” said Gaura Sengupta, chief economist at IDFC First Bank. Core liquidity is estimated to drop to below 1% of NDTL in the March quarter, which implies that system liquidity would be even lower, given a positive government cash surplus, added Sengupta.

Under OMOs, RBI buys government bonds from banks and, in turn, injects money into the banking system.