India's Banking Surplus Hits Record High as RBI Scrambles to Absorb Excess Liquidity

India's banking system is drowning in cash. The RBI confirmed a record ₹10.73 lakh crore ($105.86 billion) liquidity surplus, driven by a massive inflow of foreign currency through its special FCNR(B) deposit scheme. To combat this flood, the central bank mopped up over ₹6 lakh crore in two VRRR auctions—though banks showed weak demand, bidding for just ₹2.59 lakh crore against a ₹7 lakh crore notified amount in the first auction.

Banks' Deployment...