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✅ Banking System Liquidity Falls Sharply in May
✅ India’s daily average banking system liquidity surplus fell nearly 60% in May as inflows dried up.
✅ Liquidity surplus stood at ₹1.63 lakh crore, just above 0.6% of banking deposits, compared with ₹3.84 lakh crore in April.
✅ Tight cash conditions forced the RBI to conduct 8 variable rate repo auctions in May, against only 1 auction on April 30.
✅ RBI’s report suggests surplus liquidity in the 0.6%–1.1% range helps keep call money rates near the policy rate.
✅ Traders say weak government spending and continued outflows are putting pressure on liquidity.
📌 Impact: Tight liquidity can keep short-term rates firm and may influence RBI’s liquidity management ahead.
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