The Reserve Bank of India has announced measures to inject over Rs 2 lakh crore liquidity into the banking system. In a press release, the central bank said it will conduct OMO purchase auctions, the Variable Rate Repo operation, and the USD/INR Buy/Sell Swap auction to manage liquidity conditions.
The Reserve Bank stated that it will conduct a 90-day Variable Rate Repo (VRR) operation for an amount of Rs 25,000 crore on January 30, 2026.
Further, the Central bank will conduct a USD/INR Buy/Sell Swap auction of $10 billion with a 3-year tenor on February 04, 2026.
Additionally, the Reserve Bank will conduct OMO purchase auctions of Government of India securities for an aggregate amount of Rs 1,00,000 crore in two tranches of Rs 50,000 crore each, to be held on February 05, 2026, and February 12, 2026.
The Reserve Bank said it will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.
Previous liquidity measure by RBI
The latest liquidity boost announcement by the Reserve Bank follows its December 23 announcement, which provided a liquidity infusion of around Rs 3 lakh crore into the banking system via OMOs and a buy/sell dollar-rupee swap.
In December, the Reserve Bank announced bond purchases worth Rs 2 lakh crore through OMOs, conducted in four tranches of Rs 50,000 crore each, and a three-year dollar/rupee buy/sell swap auction of $10 billion.
As part of the December announcement, the RBI carried OMO purchase auction of Rs 50,000 crore on January 22.
In line with expectations
“The durable liquidity measures were expected to ensure that system liquidity rises to RBI target levels of 0.6% to 1% of net demand and time liabilities,” Gaura Sen Gupta, chief economist at IDFC First Bank, told Reuters.
“The VRR is transient liquidity provided to ensure that overnight rates remain contained.” She added. She expects another 1 trillion rupees of bond purchases in March which will take the banking system liquidity to 0.9% of net deposits.
“The announcement was much needed and has come in line with expectations and should lead to some reversal in yields,” a trader with a state-run bank said.