The Reserve Bank of India will conduct an outright open market purchase of government securities worth ₹500 billion on December 11. The move aims to inject durable liquidity and smooth bond-market conditions amid year-end funding pressures, while keeping the broader monetary-policy stance focused on bringing inflation closer to target.
RBI’s liquidity support move
The RBI has announced an open market operation (OMO) purchase auction of government bonds aggregating ₹500 billion, to be held on December 11. Such outright purchases add durable liquidity to the banking system, helping cool short-term money-market rates and easing pressure on banks’ funding costs. The operation comes as government cash balances, currency leakage and robust credit demand have intermittently tightened system liquidity toward the busy year‑end period.
The central bank is expected to specify eligible securities across different maturities, typically spread along the curve to help improve market functioning and support an orderly evolution of the yield curve. While the step is liquidity‑supportive, it does not on its own signal a shift away from the RBI’s current “withdrawal of accommodation” stance, which remains oriented toward anchoring inflation expectations.
Key highlights
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RBI to conduct an outright OMO purchase of government securities worth ₹500 billion.
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Auction scheduled for December 11, with a basket of dated government bonds likely to be notified.
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Objective is to inject durable liquidity and smooth money- and bond‑market conditions.
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Move comes amid tight liquidity from high credit growth, government cash build‑up and festive‑season currency demand.
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Liquidity action seen as technical; policy stance and repo rate guidance still driven primarily by inflation trajectory.
Sources: Real‑time central bank and market reports; public RBI communication on OMO operations and liquidity management framework.