Banking-system liquidity rose to a record high and the Reserve Bank of India (RBI) absorbed over ₹6 trillion ($63.53 billion) worth of cash in a single day in cash withdrawals auctions. It was a result of the surplus liquidity of ₹11.6 trillion, which represents approximately 4 per cent of all bank deposits. They were taking steps to ensure that there was not too much rupee liquidity which could affect short-term rates and the task of controlling inflation.

The RBI took in more than $127 billion through a special scheme of accepting foreign currencies from non-residents, which the banks exchanged for rupees, leading to the excess of currency in circulation rising to record levels. After a 30-day auction for a cap of ₹7 trillion, which attracted relatively weak bids of approximately ₹2.59 trillion, RBI had a follow-up overnight auction that garnered around ₹3.53 trillion. These operations have pulled back more than ₹6 trillion, though markets are keen to see additional measures taken either rate increases or CRR adjustments, if surpluses continue to stay high.

The RBI's large-scale, rapid VRRR operations were a tactical move to cope with the unprecedented liquidity surplus created by an inflow of foreign currency. These measures are temporary, with an amount of over ₹8.5 trillion being withdrawn via auctions, but the money will be returned as the instruments come to maturity. This is making it harder for the central bank to carefully regulate liquidity for a few weeks ahead to prevent further excesses and maintain stable money-market conditions.