RBI Announced OMO of Government Securities worth ₹2 Lakh Crore

On December 23, the Reserve Bank of India (RBI) announced a fresh set of liquidity measures, including large-scale government bond purchases and a foreign exchange swap, aimed at injecting durable liquidity into the banking system.

Large-Scale OMO Purchases by RBI

The central bank said it will conduct open market operation (OMO) purchases of Government of India securities totaling ₹2 lakh crore, divided into four equal tranches of ₹50,000 crore each. The auctions are scheduled for December 29, January 5, January 12, and January 22.

Additionally, the RBI will hold a USD/INR buy-sell swap auction worth $10 billion with a three-year tenor on January 13, 2026, as part of its efforts to stabilise funding conditions in the market.

Liquidity Deficit in the Banking System

These measures follow a liquidity squeeze in the banking system caused by large outflows linked to advance tax and GST payments. Currently, system liquidity is in a deficit of around ₹54,852 crore, after remaining in surplus for nearly two months.

Also Read: Indian Rupee Held Strong Momentum on December 24 Following RBI’s Liquidity Measures

Market participants noted that the announced OMO purchase size is at the upper end of expectations and could help ease upward pressure on bond yields. The benchmark 10-year government bond yield has risen about 12 basis points this month to 6.63%, driven by tighter liquidity and increased state-level debt issuance.

The RBI’s bond-buying and FX swap operations are also expected to counteract the effects of recent dollar sales by the central bank, which were aimed at containing weakness in the rupee.

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