More Stories

Informist, Friday, Feb. 6, 2026

 

Please click here to read all liners published on this story

--RBI Malhotra: Daily average LAF surplus INR 700 bln since Dec policy 
--RBI Malhotra: Interest rate effect of 2025 rate cuts is 94% 
--RBI Malhotra: CP, CD rates rose in Jan after declining till Dec 
--RBI Malhotra: Will remain proactive in liquidity mgmt 
--RBI Malhotra: Will ensure sufficient liquidity in banking system 
--RBI Malhotra: Liquidity mgmt will be pre-emptive 
--RBI Malhotra: Will leave buffer to deal with unexpected liquidity changes 
--RBI Malhotra:To give liquidity buffer to limit impact of govt cash balance 
--RBI Malhotra:To give liquidity buffer to limit impact of FX intervention 
--RBI Malhotra: Liquidity mgmt will allow for changes in govt balances 
--RBI Malhotra: Liquidity mgmt will allow for changes due to FX intervention 
--RBI Malhotra: It is our duty to provide ample liquidity 
--RBI Malhotra: Our duty to provide liquidity to meet econ's productive needs 
--RBI Malhotra: Have OMOs, VRRs, VRRRs for liquidity 
--RBI Malhotra: We have tools to ensure liquidity is at policy repo rate 
--RBI Malhotra: We have OMO, VRR, VRRR to help manage liquidity 
--RBI Malhotra: Transmission excellent, to provide liquidity pre-emptively  
--RBI Malhotra:Liquidity a continuous process, have provided it outside policy 
--RBI Malhotra:We cannot mention exact details on liquidity in policy statement 
--RBI Malhotra: We are not looking at changing liquidity mgmt framework 
--RBI Malhotra: Not looking at making changes to liquidity mgmt immediately 
--RBI Malhotra: Liquidity mgmt framework is complex due to market linkages 
--RBI Malhotra: CD ratio not important for us, liquidity is

 

MUMBAI – The Reserve Bank of India will remain proactive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy and to facilitate monetary policy transmission, Governor Sanjay Malhotra said Friday. "Liquidity management would be pre-emptive with sufficient allowance for unanticipated fluctuations in government balances, changes in currency in circulation, forex intervention, etc.," the governor said at the Monetary Policy Committee's sixth bi-monthly meeting for 2025-26 (Apr-Mar).

 

Systemic liquidity, as measured by the net position under the liquidity adjustment facility, was at a surplus of INR 700 billion on a daily average since the last policy meeting on Dec. 5, Malhotra said. The central bank has infused INR 4 trillion of durable liquidity through open market operations auctions and around $25 billion through dollar-rupee buy-sell swap since the last policy meeting in December.

 

In FY26, the RBI reduced the repo rate by 125 basis points. This led to a 105-bps decline in the weighted average lending rate of scheduled commercial banks for fresh rupee loans during February and December. The interest rate effect is 94 bps. The weighted average domestic term deposit rate on fresh deposits declined by 95 bps, while that on the outstanding deposits softened by 41 bps over the same period, the governor said.

 

The governor said rates on commercial papers and certificates of deposit tightened in January due to moderation in surplus liquidity and excess supply on the back of redemptions in CPs and CDs the same month. Year-end seasonal effects added to the uptick in rates on CPs and CDs.

 

Rates on three-month CDs rose to 7.20-7.25% in January from 5.99-6.07% in December, and those on one-year CDs were up at 7.20-7.25% in January from 6.60-6.70% in December. However, to control rates, the central bank had provided continuous transient liquidity into the banking system.

 

Addressing the media after the policy announcement, the governor reiterated that it is the RBI's duty to provide ample liquidity and manage it pre-emptively. "Our duty is to provide liquidity to meet the economy's productive needs. To be able to ensure that monetary policy transmission happens, not only in the overnight markets, the money markets, the government security markets, the corporate, the credit markets, all the markets," Malhotra said.

 

The governor added that monitoring liquidity is a continuous process and "have provided it outside policy". "We have OMO (auctions), (long-term, short-term) VRRs, VRRRs to ensure that we give liquidity, and we keep the overnight liquidity at the policy repo rate."

 

The RBI had conducted 25 short-term variable rate repo auctions through which it infused over INR 13 trillion of transient liquidity into the banking system between mid-December and end of January. The central bank had also infused INR 1.37 trillion of temporary liquidity through two 90-day VRR auctions on Jan. 30.

 

Commenting on the changes in liquidity coverage ratio, Malhotra said the central bank is not looking at changing the liquidity management framework immediately. "Liquidity management framework is complex due to market linkages," the governor said.

 

He added that the RBI prioritises liquidity over the credit-deposit ratio. Bank deposits, which were INR 245 trillion as of Jan. 15, have not grown as much as credit and this has pushed the credit-deposit ratio of banks to a high of 82%. The ideal range for the ratio is 76–80% for Indian banks and a ratio exceeding 80?n strain liquidity.  End

 

US$1 = INR 90.75

 

Reported by J. Navya Sruthi

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.