India's banks hold ₹7.76L/cr surplus on $127bn forex inflows
India's banks are now sitting on a massive liquidity surplus of ₹7.76 lakh crore, their highest since early 2022.
This jump mostly comes from $127 billion in foreign exchange inflows through special schemes, according to the RBI.
With all this extra cash, short-term borrowing rates have dipped to 4.81%, well below the main policy rate.
Banks park ₹4.6L/cr, surplus seen moderating
To soak up the extra money, the RBI has been running big reverse repo auctions. Just this week, banks parked ₹4.6 lakh crore overnight with it.
But don't expect this surplus to last: experts think it'll moderate from 3QFY27 as festival spending rises and softer government spending.
Soumyajit Niyogi, director at India Ratings, says things could get even tighter after that if capital inflows slow down and forex positions mature, which might push the RBI to step in again.