RBI Announces ₹1 lakh Crore Bond Sale To Drain Surplus Liquidity
Add Preferred News Source
RBI will sell ₹1 lakh crore of government securities through OMOs to absorb surplus liquidity. Governor Sanjay Malhotra said additional measures may be used to manage banking-system liquidity.
The Reserve Bank of India (RBI) has announced plans to sell government securities worth ₹1 lakh crore through open market operations (OMOs). The move is aimed at absorbing excess liquidity from the banking system.
The bond sales will be conducted in three tranches. The first auction of ₹50,000 crore is scheduled for 17 September, followed by ₹25,000 crore each on 21 September and 28 September.
The RBI will use a multi-security auction with the multiple-price method. The securities on offer will have maturities ranging from 2029 to 2032.
Governor Signals Wider Range Of Liquidity Tools
The announcement came shortly after RBI Governor Sanjay Malhotra said the central bank had several options to manage surplus liquidity. These include OMO sales and dollar-rupee swaps.
Malhotra said no option was off the table if further action was required. The RBI's objective is to maintain adequate liquidity while keeping the weighted average call rate aligned with the policy repo rate.
The banking system has been dealing with a large liquidity surplus following substantial foreign-currency inflows. Surplus liquidity has remained above ₹10 trillion since early September, putting downward pressure on overnight money-market rates.
Why The RBI Is Draining Liquidity
Recent variable rate reverse repo (VRRR) operations have not been sufficient to bring overnight rates back to the desired level. The RBI is therefore turning to a more direct liquidity-draining measure through bond sales.
The central bank's move could put some upward pressure on government bond yields as the market absorbs the additional supply. The 10-year government bond yield had already risen to around 7.035% following the governor's comments about possible bond sales.
Also Read - Gold Loans Reach ₹20 Lakh Crore But RBI Sees No Signs Of Overheating
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
Right Tools, Rich Insights
