The surplus was the largest recorded since April 2026. Month-end government payments, including salaries and pensions, helped lift bank balances as public spending moved into accounts across the banking system.

Another major source was Foreign Currency Non-Resident (Bank), or FCNR(B), deposits, which allow NRIs to hold funds in foreign currencies. Banks raised about $65.4 billion through a special RBI swap arrangement. Exchanging those dollars for rupees increased available domestic funds. Experts estimate that flows through these facilities could eventually reach $95 billion, with a potential liquidity addition of ₹9 lakh crore.

The RBI has been absorbing spare funds through Variable Rate Reverse Repo, or VRRR, auctions. These let banks earn interest by temporarily placing surplus money with the central bank. The aim is to limit inflation risks and keep market rates near the repo rate. Yet liquidity stayed elevated despite 23 recent auctions.

HDFC Bank’s report indicated that the surplus could have been larger. RBI dollar sales to support rupee stability and cash withdrawals by the public partly offset the inflows. Surplus liquidity is expected to remain around ₹4–4.5 lakh crore during September and October. Government bond repayments may add funds in November, before tax outflows reduce the surplus during January–March.