The Reserve Bank of India (RBI) will sell worth ₹1 lakh crore through open market operations (OMOs) in September to absorb excess liquidity from the banking system. This move aims to align overnight money market rates with the policy repo rate.
₹1 lakh crore
Total OMO Sale
⏳ Time Machine
How today’s news fits into the bigger picture
August 2013
Taper Tantrum
Global financial markets, including India's, faced significant volatility when the US Federal Reserve hinted at tapering its quantitative easing, leading to capital outflows from emerging markets.
September 2024
Last Net OMO Bond Sale
The RBI last conducted a net sale of bonds through OMOs, marking a two-year gap before the current announcement, highlighting the current unique liquidity situation.
Early 2026
$127 Billion FCNR(B) Inflows
Indian banks mobilized a substantial $127 billion through the RBI's special FCNR(B) deposit scheme, which boosted foreign exchange reserves but injected significant rupee liquidity into the system.
Early September 2026
Liquidity Above ₹10 Trillion
Excess liquidity in the banking system persistently remained above ₹10 trillion, pushing overnight money market rates below the RBI's repo rate.
September 11, 2026
Governor Signals Tools
RBI Governor Sanjay Malhotra stated the central bank has multiple tools, including OMOs and forex swaps, to manage surplus liquidity, shortly before the bond sale announcement.
Today
The RBI announced plans to sell ₹1 lakh crore in government securities to absorb excess banking system liquidity.
What happens next?
The RBI will conduct three bond auctions in September, with market participants watching the impact on bond yields and potential further liquidity measures.
The RBI has announced plans to conduct open market sales of government securities totaling ₹1 lakh crore this month. This aggressive measure comes in response to a significant surplus of cash in the banking system, which has been pushing overnight interbank rates below the central bank's policy repo rate. The bond sales will occur in three tranches: an initial auction of ₹50,000 crore on September 17, followed by two auctions of ₹25,000 crore each on September 21 and September 28. This is the first net sale of bonds through OMOs in two years, signalling a decisive effort by the RBI to manage liquidity.
💭 If you're wondering…
The RBI drains liquidity to manage the amount of money circulating in the banking system. Too much liquidity can push short-term interest rates below the central bank's target, making its monetary policy less effective and potentially fueling inflation.
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