Rejecting contentions of tightness, the Reserve Bank of India (RBI) on Friday said the systemic liquidity remains in a surplus mode and will only increase in the second half of the fiscal when both the central and state governments implement their expenditure plans.

On September 20, the liquidity in the banking system as reflected by the net injection of funds had turned into a deficit mode of Rs 21,873 crore for the first time in 40 months.

Given the festival season during which people withdraw cash, economists had forecast that liquidity would remain tight creating pressure on market rates such as the weighted average call rate.

RBI governor Shaktikanta Das feels otherwise: he said surplus liquidity as reflected in the average daily absorptions under the liquidity adjustment facility (LAF) moderated to Rs 2.3 lakh crore during August-September 2022 (up to September 28) from Rs 3.8 lakh crore during June-July.

“The liquidity is not tight. The net LAF continues to be in surplus for the last two and half years.

“There has been this temporary movement of liquidity from the system into a different basket. The second half expenditures of Government are always very high so that (liquidity) will come back,” Das said.

“So if you take everything into account, the system liquidity is in the order of about Rs 5 lakh crore so there should not be any concern about liquidity being suddenly tight,’’ he said.

Upbeat tone

■ Central and state government spending in H2 should inject liquidity

■ Surplus liquidity moderated to Rs 2.3 lakh crore in August-September