Liquidity surplus in the banking system zoomed past Rs 1.75 trillion on the last day of May on the back of higher government spending, latest data released by Reserve Bank of India showed. On Wednesday, the surplus liquidity in the banking system was around Rs 1.76 trillion, while it was approximately Rs 1.35 trillion on Tuesday. The surplus was over Rs 1 trillion in the past few days. “The improvement in liquidity conditions by May 31 is likely due to the pick-up in government expenditure, which is the usual pattern given that salary payments, etc. usually take place at month-end. Other factors that have helped ease liquidity pressures in May are reduction in currency leakage with currency in circulation falling by Rs 13,300 crore (May 26 over April 28),” said Gaura Sengupta, India economist, IDFC First Bank. The surplus liquidity in the system has cooled off the overnight rates, which dropped to 6.15 per cent on Thursday. According to the Clearing Corporation of India data, the weighted average call rate was 6.32 per cent on Thursday as compared to 6.33 per cent in the previous day.