RBI Announces ₹1 Lakh Crore OMO Bond Sales To Absorb Excess Liquidity
The RBI announced government bond sales worth Rs 1 lakh crore in three tranches on September 17, 21 and 28 to absorb excess liquidity. The move comes after banks raised $127 billion under a special forex mobilisation scheme. Indian bond yields rose following the announcement, with the benchmark 10-year yield reaching 7.035%.
RBI plans three government bond auctions to drain surplus liquidity from India’s banking system | AI Generated Representational Image
Mumbai, September 11, 2026: The Reserve Bank of India on Friday announced an open market sale of bonds maturing in fiscal 2029 to fiscal 2032 worth Rs 1 lakh crore, and the move aims to drain excess liquidity in the economy.
The sale will be done in three tranches of Rs 50,000 crore, Rs 25,000 crore, and Rs 25,000 crore to be held on September 17, 2026, September 21, 2026, and September 28, 2026, respectively.
It will be done through a multi-security auction using the multiple price method, the central bank said in a statement.
First Net Bond Sale In Two Years
The OMS of bonds is the first net sale of bonds in two years, after it sold notes in the secondary market in September 2024. The central bank had conducted simultaneous purchase and sale of bonds in fiscal 2021 and 2022.
"Eligible participants should submit their bids in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 9:30 am and 10:30 am on September 17, 2026. The result of the auction will be announced on the same day," said RBI.
Indian bonds extended their declines after the news of debt sale, with yields touching their highest levels in over three months.
The benchmark 10-year bond yield rose to 7.035 per cent, up 6 bps on the day, while its 5-year bond rose nearly 10 bps to 6.6222 per cent.
Surplus Cash In Banking System
India's banking system is experiencing surplus cash after lenders raised a much larger-than-expected $127 billion under the RBI's special forex mobilisation scheme, which boosted central bank reserves to an all-time high.
The excess rupee liquidity has pushed overnight rates below the policy repo rate, leading the central bank to take liquidity absorption measures even as elevated oil prices threaten to add to inflationary pressures.
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In order to absorb excess liquidity, markets had expected a combination of temporary and permanent measures including FX swaps, MSS bonds, OMO sales, and possible CRR hikes, a recent report had said.
(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)
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