RBI's ₹3 Trillion Liquidity Boost

In order to ease liquidity constraints caused by currency interventions and seasonal factors like advance tax outflows, the Reserve Bank of India (RBI) announced plans to pump almost ₹3 trillion into the banking system through open market operations (OMOs) and a forex swap.

RBI's Liquidity Plan Details

On 29 December, 5, 12, and 22 January, the RBI would purchase ₹2 trillion worth of Government of India securities in four tranches of ₹50,000 crore each. On 13 January, a $10 billion, three-year USD/INR buy-sell swap auction is scheduled to provide approximately ₹83,000 crore in rupee liquidity while guaranteeing future dollar availability.

Reasons for the Infusion

The action addresses a ₹54,851 crore system liquidity gap as of 22 December, which was caused by tax payments, increased currency demand, and the RBI's recent dollar sales to support the rupee. After the RBI injected ₹9.5 trillion earlier in 2025, the situation changed from deficit to surplus by March.

Market Reactions and Outlook

The ₹3 trillion infusion was deemed timely and reasonable by economists at HDFC Bank and IDFC First Bank, who anticipated that it would raise the liquidity surplus over 1% of Net Demand and Time Liabilities (NDTL) by March. Bond yields may decline, which would improve market dynamics; nevertheless, future actions will rely on the need for foreign exchange.