With reference to the Reserve Bank of India's liquidity management, consider the following statements: 1. The system liquidity surged to over ₹11 lakh crore in September. 2. The RBI utilized $50 billion sell-buy swaps to manage the liquidity surge. 3. The Weighted Average Call Rate (WACR) was stabilized at 4.93%. Which of the statements given above is/are correct?

RBI drains funds as system liquidity surges to over ₹11 lakh crore

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 22 October 2026

Monetary policy tools and liquidity management: a key GS3 topic regarding RBI's role in economic stability.

Why in news

The Reserve Bank of India (RBI) intervened to drain excess system liquidity that surged to over ₹11 lakh crore in September due to massive inflows from overseas Indians.

Background

System liquidity rose from ₹3.5 lakh crore in August to over ₹11 lakh crore in September. The RBI utilized Variable Rate Repo (VRR) auctions, $10 billion sell-buy swaps, and raised the Cash Reserve Ratio (CRR) to 99% to stabilize the Weighted Average Call Rate (WACR) at 4.93%.

Facts for Prelims

FactSystem liquidity reached over ₹11 lakh crore in September 2026
FactWeighted Average Call Rate (WACR) reached 4.93% following the liquidity surge
FactFCNR(B) scheme attracted $133 billion from overseas Indians

Prelims practice question

With reference to the Reserve Bank of India's liquidity management, consider the following statements:

The system liquidity surged to over ₹11 lakh crore in September.
The RBI utilized $50 billion sell-buy swaps to manage the liquidity surge.
The Weighted Average Call Rate (WACR) was stabilized at 4.93%.

Which of the statements given above is/are correct?

(a)1 and 2 only
(b)1 and 3 only
(c)2 and 3 only
(d)1, 2 and 3

Show answer

Answer: (b) 1 and 3 only — Statements 1 and 3 are correct. Statement 2 is incorrect: The RBI utilized $10 billion sell-buy swaps.

For Mains

Q. Discuss the significance of the Reserve Bank of India's liquidity management tools in maintaining monetary stability amidst volatile capital inflows from the diaspora.

Dimensions to cover in your answer

Monetary transmission: Balancing high CRR requirements with the need for commercial bank lending capacity
Capital flow volatility: Managing the impact of large-scale FCNR(B) inflows on domestic interest rate stability

Keywords: Liquidity Management · Monetary Policy · Capital Inflow · CRR · WACR · Monetary Stability

Read the full news →Report a mistake in this note How notes are made Source: Economic Times ↗Also: GS2 · Indian diaspora

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