Durable Liquidity
RBI Malhotra recommits to enough durable liquidity for rate-cut transmission
This story was originally published at 22:23 IST on 23 February 2026
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--RBI Malhotra: Will give durable liquidity to ensure rate transmission
--RBI Malhotra: Liquidity measures to be pre-emptive, pro-active
NEW DELHI – Reserve Bank of India Governor Sanjay Malhotra Monday reiterated that the central bank would ensure enough durable liquidity in the banking system for the transmission of policy rates in all markets, including money markets, banks, and government bonds. He said the banking regulator would ensure the provision of sufficient liquidity cushion to tide over routine fluctuations from currency leakage, the RBI's intervention in the foreign exchange market, and rise in bank deposits.
"We stand committed to provide liquidity for the productive needs of the economy," Malhotra said at a press conference following the 621st meeting of the RBI's board, which was attended by Finance Minister Nirmala Sitharaman. "I would also like to state that it will be pre-emptive and it will be proactive."
The governor had made similar remarks following the Monetary Policy Committee's Feb. 4-6 meeting. Systemic liquidity, as measured by the net position under the liquidity adjustment facility, has averaged a surplus of INR 2.57 trillion in February, a little over 1% of banks' net demand and time liabilities.
The central bank infused INR 4 trillion of durable liquidity through open market operations auctions and around $25 billion through dollar-rupee buy-sell swaps between the December and February meetings of the Monetary Policy Committee. It has in recent months focused on the transmission of the rate-setting panel's 125-basis-points of repo rate cuts between February and December last year, which has brought the policy rate down to 5.25%. End
Reported by Aaryan Khanna
Edited by Rajeev Pai
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