RBI withdraws about $20 billion to absorb excess liquidity

Business Sep 29, 2026

The Reserve Bank of India (RBI) just took out about $20 billion from the banking system to soak up extra cash floating around.

It did this using a mix of dollar-rupee sell-buy swaps, spot dollar sales, bond sales, and variable-rate reverse repos.

Thanks to these moves, the huge surplus in banks, ₹11.16 trillion in the first week of the month, has dropped noticeably.

RBI tightening raises dollar hedging costs

By tightening up liquidity, the RBI has made it more expensive for banks and companies to hedge their dollar risks.

This could mean even more cash gets pulled out soon.

RBI Governor Sanjay Malhotra says he is sticking with targeted actions like bond sales and FX swaps instead of big blanket changes, all in an effort to keep the economy balanced and stable.