India Monetary Policy RBI MPC Decisions — October 30, 2026

Total reserves at US$719,748 Mn, up US$24,392 Mn YoY despite a US$1,269 Mn weekly dip; FCA rose US$1,358 Mn WoW to US$593,205 Mn — core external buffer intact

Net durable liquidity surplus of ₹10,14,401 Cr as of Sept 30, 2026 provides ample system liquidity despite daily absorption operations

Overnight weighted average at 5.51% vs SDF 5.25% and MSF 5.50% — money market anchored near the upper corridor, implying no imminent easing bias [NEUTRAL/BEARISH for early cuts]

Scheduled commercial bank credit up 18.2% YoY and 5.4% FY-to-date — strong credit impulse supportive of bank NII growth

Aggregate deposits up 16.7% YoY and 5.8% FY-to-date — trailing credit growth by ~150 bps, keeping deposit competition and funding costs elevated

SDF absorption of ₹1,74,418 Cr at 5.25% signals banks parking surplus cash with RBI rather than lending — reflects ample but cautious liquidity

₹29,900 Cr state government securities auction on Nov 3 across 12 States/UTs — Maharashtra ₹7,200 Cr, West Bengal ₹5,000 Cr, MP ₹4,000 Cr; watch cut-offs for state borrowing cost signals

Term repo in corporate bonds traded at a single 7.90% — wide spread over 5.51% overnight, indicating term premium and corporate funding cost stickiness [BEARISH for corporate borrowers]

Contracted 11.2% over the fortnight — CASA accretion weakening, a negative for bank margin outlook

Down US$2,650 Mn WoW and US$12,245 Mn since end-March 2026 — persistent drawdown reduces the valuation cushion in reserves

Gold reserves fell US$2,650 Mn in a single week and US$12,245 Mn since end-March 2026 — a sustained decline that could reflect valuation losses or active management; monitor for further erosion of reserve quality

Demand deposits shrank 11.2% over the fortnight — signals tightening short-term liquidity and weakening CASA base, pressuring bank NIMs [HIGH RISK for bank margins]

Credit growth at 18.2% YoY vs deposit growth 16.7% YoY — a ~150 bps gap that forces banks to bid up deposit rates, sustaining funding cost pressure

Net liquidity from operations at -₹1,65,213 Cr with SDF absorption of ₹1,74,418 Cr — persistent absorption suggests RBI is comfortable with current tightness, limiting scope for near-term rate cuts [MEDIUM RISK for rate-sensitive sectors]

Weighted average 5.51% vs MSF 5.50% — money market trading at the ceiling implies liquidity tightness at the margin, raising the risk of intermittent rate spikes

Term repo at 7.90% vs 5.51% overnight — a ~240 bps spread signals elevated term funding costs for corporates, a drag on capex

₹29,900 Cr auction on Nov 3 adds to sovereign/sub-sovereign supply — could pressure G-sec yields and crowd out corporate issuance

Weekly FX reserve swings (down US$1,269 Mn) driven by gold valuation rather than flows — headline reserve stability masks underlying volatility

Credit growth of 18.2% YoY with durable liquidity surplus of ₹10.14 lakh Cr creates a favorable lending environment — banks with strong deposit franchises stand to gain

With overnight rates anchored at 5.51% and no easing signal, rate-sensitive sectors (autos, real estate) may see relief only if deposit growth catches up — watch for a shift in RBI's absorption stance

Nov 3 SDL auction offers ₹29,900 Cr across 12 States — attractive entry for yield-seeking investors if cut-offs widen; Maharashtra, WB, MP largest issuers

US$719.7 Bn reserves, up US$24,392 Mn YoY, provide a strong buffer against external shocks — supports INR stability and lowers currency risk for importers

7.90% term repo rate offers a clear benchmark — issuers with strong ratings can access term funding at a known spread; monitor for compression as liquidity remains ample

Banks that can accelerate deposit growth (16.7% YoY currently) to close the credit gap will capture market share and protect NIMs — watch for aggressive deposit rate offers

Durable liquidity surplus of ₹10.14 lakh Cr supports short-term money market instruments — liquid funds and short-duration debt stand to benefit

If SDL cut-offs come in tight on Nov 3, it signals strong demand for state paper — a positive for state finances and infrastructure spending

RBI's SDF absorption of ₹1,74,418 Cr and net operational absorption of ₹1,65,213 Cr indicate a deliberate liquidity-draining stance, even as durable surplus remains large — policy bias is neutral-to-tight, limiting early rate cut expectations

Credit growth (18.2% YoY) outpacing deposit growth (16.7% YoY) by ~150 bps is a systemic theme — banks face structural funding pressure, keeping deposit rates elevated and NIMs under watch

FX reserves at US$719.7 Bn, up US$24,392 Mn YoY, with FCA rising US$1,358 Mn WoW — India's external position remains robust despite gold valuation drag, supporting macro stability

Overnight weighted average at 5.51% (near MSF 5.50%) and demand deposit contraction of 11.2% fortnightly suggest short-term liquidity is tight, with call money ranging 4.30-5.80% — a theme of intermittent pressure

Corporate bond repo at 7.90% vs 5.51% overnight reflects a ~240 bps term premium — corporate funding costs remain elevated, a headwind for private capex

₹29,900 Cr SDL auction on Nov 3 across 12 States/UTs adds to the supply calendar — watch for yield impact and demand absorption, especially from Maharashtra (₹7,200 Cr) and West Bengal (₹5,000 Cr)

Next release due Nov 6, 2026 — watch for further gold reserve drawdown and FX reserve trajectory after the US$1,269 Mn weekly dip

₹29,900 Cr across 12 States — monitor cut-off yields for signs of demand strength or yield pressure; results same day

Daily releases through early November — watch overnight rate vs 5.50% MSF ceiling for signs of liquidity stress

Fortnightly data — the 11.2% contraction needs monitoring; a second consecutive decline would signal persistent CASA weakness

Monthly credit growth (18.2% YoY) vs deposit growth (16.7% YoY) — watch for narrowing or widening; a widening gap would pressure bank margins

US$12,245 Mn decline since end-March 2026 — monitor for continued drawdown, which could affect reserve adequacy metrics

7.90% term rate — watch for spread compression as a signal of easing corporate funding conditions

No explicit rate decision in these filings, but liquidity stance suggests on-hold bias — watch for any MPC commentary or unscheduled announcements