Reserve Bank of India (RBI) absorbed ₹1.10 lakh crore of surplus liquidity from the banking system on 9 July 2026, indicating that banks continue to hold excess cash despite active money market operations. The liquidity absorption was primarily carried out through the Standing Deposit Facility (SDF), RBI’s collateral-free liquidity absorption tool.
RBI data also showed that the net durable liquidity surplus stood at ₹4.82 lakh crore (as of 15 June 2026), reflecting comfortable liquidity conditions in the financial system.
RBI Liquidity Operations Highlights
- RBI absorbed ₹1.67 lakh crore through the Standing Deposit Facility (SDF).
- SDF interest rate is: 5.00%.
- RBI simultaneously injected ₹46,729 crore through Repo operations at 5.26%.
- Net liquidity impact of the day’s operations:
- Gross absorption: ₹1.20 lakh crore.
- Overall net liquidity absorption: ₹1.10 lakh crore (after accounting for outstanding liquidity facilities).
- Indicates the presence of substantial surplus liquidity with commercial banks.
Money Market Activity
- Overnight money market remained highly active.
- Total overnight transactions: ₹6.91 lakh crore.
- Weighted Average Interest Rate (WAIR): 5.28%.
Segment-wise Transactions
- Triparty Repo: ₹4.81 lakh crore (largest share).
- Market Repo: ₹1.78 lakh crore.
- Call Money Market: ₹24,893 crore.
Cash Reserve Position
- Banks maintained ₹7.88 lakh crore as cash balances with RBI (9 July 2026).
- Average Cash Reserve Requirement (CRR) for the fortnight ending 15 July 2026 was ₹7.98 lakh crore.
Standing Deposit Facility (SDF)
It is a collateral-free monetary policy instrument introduced by the Reserve Bank of India in April 2022 to absorb surplus liquidity from the banking system. It enables commercial banks to park excess overnight funds with RBI and earn interest without the RBI providing government securities as collateral.
Key Features
Collateral-Free Liquidity Absorption
- RBI absorbs surplus funds without pledging government securities.
- Eliminates limitations arising from the availability of government securities.
Part of Liquidity Adjustment Facility (LAF)
- SDF has largely replaced the Fixed Rate Reverse Repo as the lower bound of the Liquidity Adjustment Facility (LAF) corridor.
Interest Rate
- SDF rate is generally fixed at 25 basis points (0.25%) below the Repo Rate.
- Current SDF rate (as per the operation): 5.00%.
Unlimited Absorption Capacity
- Being uncollateralized, RBI can absorb virtually unlimited surplus liquidity whenever required.
Significance
- Helps RBI manage excess liquidity without expanding its balance sheet.
- Strengthens the effectiveness of monetary policy transmission.
- Maintains short-term interest rates close to the policy corridor.
- Provides banks with a safe avenue to park surplus funds.
- Enhances flexibility in liquidity management compared to the earlier reverse repo mechanism.
- Reflects comfortable liquidity conditions in the banking system while ensuring financial stability.